Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

CLYDE PORT AUTHORITY (HUNTERSTON ORE TERMINAL) ORDER CONFIRMATION

Mr. Gordon Campbell presented a Bill to confirm a Provisional Order under Section 8 of the Private Legislation Procedure (Scotland) Act 1936, relating to Clyde Port Authority (Hunterston Ore Terminal); and the same was read the First time; and ordered to be read a Second time upon Tuesday 20th November, and to be printed [Bill 11].

Oral Answers to Questions — WALES

Steel Industry (Redundancies)

Mr. Barry Jones: asked the Secretary of State for Wales what further consultations he has had with the British Steel Corporation regarding proposed redundancies in the steel industry in Wales.

The Secretary of State for Wales (Mr. Peter Thomas): I maintain my close and regular contact with the British Steel Corporation on all aspects of the steel industry in Wales.

Mr. Jones: Will the right hon. and learned Gentleman promise to make a last-ditch stand in the Cabinet, in an effort to save the 6,000 jobs which are due for the axe at Shotton? Does he not feel ashamed of his Government's willingness to stop so many jobs and prospects at a time of international and national steel shortage? Also, does he not consider it crazy and irresponsible to plan to axe 9,000 job opportunities in the Shotton area at a time when the local council has indicated that its estimate of 20,000 jobs by 1981 is a conservative one?

Mr. Thomas: First, I certainly cannot accept the figures that were mentioned by the hon. Gentleman. As he knows, the Government have accepted the strategy of the British Steel Corporation and many of the matters to which he referred are now matters for the corporation. He also knows that the Government have accepted their responsibility for dealing with the social consequences of that strategy. The task force has reported in respect of the area of Shotton and the Government will be making their announcements quickly. As I have told the hon. Gentleman, the task force has taken full account of the additional job losses that are likely to


arise in other related industries and they have framed their recommendations accordingly.

Sir A. Meyer: Is my right hon. and learned Friend aware of the importance of a very early announcement by the British Steel Corporation of a specific sum to be invested in the finishing side at Shotton? Without some specific assurance, the drift of people away from Shotton will assume very alarming proportions.

Mr. Thomas: Yes, I agree with my hon. Friend. I think it is generally known that the British Steel Corporation is considering at this moment a major investment in the finishing end at Shotton.

Mr. Roy Hughes: Is it not becoming apparent to the Secretary of State that in order to obtain a senior managerial position with the British Steel Corporation to carry out the vast redundancy programme in Wales one has had to spend a long period of time in Sheffield? Does this mean that there is a scarcity of managerial talent in Wales? If that is the case, what is the right hon. and learned Gentleman doing about it?

Mr. Thomas: Appointments to and within the British Steel Corporation are matters for the corporation itself, as the hon. Gentleman must have appreciated when he supported its setting up.

Caravan Homes (Rents)

Mr. John: asked the Secretary of State for Wales if he will take steps to protect mobile home residents in Wales from recent increases in rent payments.

The Minister of State, Welsh Office (Mr. Gibson Watt): There are no proposals at present for legislating on caravan sites.

Mr. John: Does the hon. Gentleman not realise that in the last 18 months mobile home residents, many of whom are retired people, have faced rent increases of 60 per cent. and more? Furthermore, does he not realise that they also face a future in which the site owner has an unchecked right to impose any rises that he thinks fit? Does the hon. Gentleman not think it is high time that the Government, in consultation with the site owners, reached an agreement to limit the extent

of rises which can be imposed in this way?

Mr. Gibson-Watt: I think the hon. Gentleman accepts the answer to his original question, that legislation is probably not the best way to deal with this matter. The most realistic way of helping caravan occupiers is, as he said, to have discussion and agreement between representatives of the parties concerned.

Mr. George Thomas: Is the Minister of State aware that by no means do we accept that legislation is not necessary? The Government must not wash their hands of the plight of caravan owners all over Wales, and particularly in my own constituency, where they are being forced to pay exorbitant increases in rent because there is no legal protection for them.

Mr. Gisbon-Watt: The right hon. Gentleman will be aware that under the Caravan Sites Act 1968, which was passed by the previous administration, no provision was made to include measures for controlling site rents.

Roads

Mr. McBride: asked the Secretary of State for Wales if he will make a statement on the progress of road construction in south-west Wales.

Mr. Peter Thomas: A large programme of trunk road schemes in South-West Wales is being undertaken. Five schemes costing nearly £12 million are in progress. Twenty-three schemes are in the firm programme, costing over £20 million. Seven are in the preparation pool, costing over £23 million. Since last March, four schemes, each over £50,000, to a total cost of nearly £½ million have been completed.

Mr. McBride: Is the Secretary of State aware that 140 industrial and commercial concerns in Swansea have waited more than 10 years for improved road access to the city, that they are apprehensive about the long-term delay in bringing the end of the M4 to a point nearer Swansea, and that, with them, I look for a dual carriageway access to the city from that point? May I remind the right hon. and learned Gentleman that Cardiff is not the only city in Wales, and that Swansea is the other? Despite the road improvements that have been made, the people of


Swansea and of West Wales generally believe that progress is deplorably slow in the light of modern traffic conditions.

Mr. Thomas: My first priority remains the construction of the M4 as far west as Pont Abraham. Allied to this is the need to ensure that trunk roads serving Carmarthenshire and Pembrokeshire are improved as necessary to meet the need for good communications between South-West Wales and the industrial areas of South-East Wales and of England. I agree with the hon. Gentleman that communications are vital. I assure him that there will be no delay which is not occasioned by the necessity to observe the proper procedures.

Derelict Land

Mr. Ifor Davies: asked the Secretary of State for Wales whether he will now reconsider his refusal to sanction grants to local authorities for derelict land schemes already approved.

Mr. Kinnock: asked the Secretary of State for Wales when he expects to publish the findings of his review of the financing of derelict land reclamation.

Mr. Gibson-Watt: My right hon. and learned Friend is currently considering the derelict land programme in relation to the many schemes which have been put forward and to the other substantial claims on available resources. He hopes soon to be in a position to determine priorities among the outstanding claims for financial assistance. Meanwhile, I am glad to say that more money is being spent in the current year on derelict land clearance in Wales than in any other previous year.

Mr. Davies: The review which the hon. Gentleman has indicated seems to be taking a very long time. Is he aware that many local authorities in Wales have already committed themselves to considerable expenditure on purchasing land for clearance schemes, with the encouragement of the Welsh Office? Is he further aware that many schemes have been given the final approval of his Department? I mention two in my own constituency, the Ystalyfera Canal and the Cwmgorse schemes. In these cases, does not the hon. Gentleman realise that sanction should be given? The Welsh Office has

been able to boast that the Derelict Land Unit is one of its great successes. Is not the present attitude of the Department likely to bring that success into disrepute?

Mr. Gibson-Watt: I welcome the interest of all local authorities in this important work. When the review is produced local authorities will be informed as soon as possible.

Mr. Kinnock: In view of the months during which this review has been taking place, is the Minister of State aware that his answer is still most unsatisfactory? There are areas in the valleys which are completely clogged by road traffic. In Risca, in my constituency, not only is there no passage through the town but people lose hours at work and bus companies are not operating effectively for hours in the day because of this review? Is not the review now becoming thought of as an excuse?
Finally, will the hon. Gentleman answer the question which I addressed to him in a letter last month, namely, will he confirm that there is no difficulty of this kind in England and that it is confined to Wales, where the need for this assistance is most acute?

Mr. Gibson-Watt: We would like very much to increase the allocation for this work. As in all matters, there have to be priorities. We have many other equally important claims on available resources. We should not overlook the fact that on miscellaneous local services alone—of which derelict land clearance forms part—we shall be spending £74·2 million this year, which is an increase of £11 million on 1971–72, at constant prices. However, I quite understand the anxiety and concern of hon. Members.

Mr. William Edwards: asked the Secretary of State for Wales when work will commence on the Glan-y-Don derelict land clearance scheme at Blaenau Ffestiniog; and whether he will make a statement.

Mr. Gibson-Watt: My right hon. and learned Friend is considering this along with many other schemes for which grant aid is being sought and he will come to a decision as soon as possible. Grant has already been paid on the consultants' fees which have been incurred on the scheme.

Mr. Edwards: Will the hon. Gentleman look again at the history of this scheme? Will he accept that there is an unsatisfactory state of affairs in the Derelict Land Unit and that a tremendous amount of work is being done by the unit in pressing forward with schemes, coupled with a tremendous increase in costs through one firm of consultants, which is leading to a situation in which many small authorities are finding themselves in considerable difficulties? Is it not a total waste of time to pay consultants' fees of £17,500 in work urged upon the council in question by the Derelict Land Unit when that unit should have known that the work could not go forward?

Mr. Gibson-Watt: I shall see that the hon. Gentleman's views are conveyed to the Derelict Land Unit. If there is a feeling that we in the Welsh Office are not looking to derelict land problems in North Wales—although the greater number of problems lie in South Wales—I should like to give the assurance that we have the problems of North Wales very much in mind.

Animal Feeding Stuffs

Mr. Cledwyn Hughes: asked the Secretary of State for Wales what representations he has received from the National Farmers' Union and the Farmers' Union of Wales about the cost of animal feeding stuffs; and if he will make a statement.

Mr. Gibson-Watt: My right hon. and learned Friend has received representations from both unions on the subject and I will, at the National Farmers' Union's request, be receiving a deputation tomorrow. On the second part of the Question, I would refer the right hon. Gentleman to the reply given by my right hon. Friend the Minister of Agriculture to the hon. Member for Manchester, Wythenshawe (Mr. Alfred Morris) on 16th October 1973.—[Vol. 861, c. 94–6.]

Mr. Hughes: I can summarise to the hon. Gentleman what the delegation tomorrow is likely to say to him with great force, namely, that the high and escalating cost of feedingstuffs, coupled with high interest rates and other factors, is causing great difficulty to dairy farmers in Anglesey and the rest of

Wales? What are the Government proposing to do to assist these farmers, especially the smaller ones, during the coming winter months and before the price review?

Mr. Gibson-Watt: I am grateful for the right hon. Gentleman's preview of the delegation tomorrow. I was not aware that he was a member of the NFU, which I am. No one underestimates the problem of rising feed costs. They have been brought about mainly because of the short Northern Hemisphere harvest last year and heavy buying by Russia and China. Protein prices rose sharply over the year. This is a problem with which all Governments have been trying to deal. My right hon. Friend the Minister of Agriculture, Fisheries and Food has made it clear that he is not opposed to considering ways of making an earlier announcement than next year's price review. Certainly he will be discussing this matter with the farmers' unions.

Mr. Gower: When my hon. Friend meets the farmers' representatives tomorrow, will he consider especially the difficulties of those who, with a good deal of official encouragement, embarked on expansion programmes, borrowing money for the purpose, and who now find themselves in real difficulty?

Mr. Gibson-Watt: I do not underestimate the problems to which my hon. Friend refers. These will be taken into account.

Mr. Goronwy Roberts: Will the hon. Gentleman address his mind to one point? Although the rapidly increasing cost of feeding stuffs bears heavily on the farming community as a whole, it has an especially severe effect on milk producers. There may be an amelioration of world conditions in the next few months, but I remind him that in answer to a Question of mine on 6th November—[Vol. 863, c. 123]—the Minister of State for Agriculture, Fisheries and Food projected a still further increase in the cost of dairy feeding stuffs of 11·6 per cent. whatever happened on the world market?

Mr. Gibson-Watt: I agree with the right hon. Gentleman that the rise in feeding stuff costs bears more heavily on milk farmers than on others. A few


months ago pig farmers shared the problem, but there has been an improvement in their position. However, in the first six months of this year milk farmers have done fairly well. It is the final six months of the year that give cause for concern. That is why I gave my earlier answer in the form that I did.

Mr. Hughes: On a point of order, Mr. Speaker. In view of the unsatisfactory milk-and-water nature of those replies I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

Castlemartin (Nugent Committee's Proposals)

Mr. Nicholas Edwards: asked the Secretary of State for Wales if he will establish a public inquiry into the consequences for the environment, for agriculture, for educational facilities and for the National Parks if the Nugent Committee's proposals for Castlemartin are implemented.

Mr. Peter Thomas: It would be premature to do this while the proposals are still under consideration.

Mr. Edwards: Is my right hon. and learned Friend aware that if this were a proposal of a private developer there would have to be a full public inquiry? Will my right hon. and learned Friend assure the House that no decision has been taken by the Government and that it will be taken only after the fullest consultation with this House and the general public?

Mr. Peter Thomas: I can certainly assure my hon. Friend that no decision has been taken by the Government. As I have said previously, the report was published to provide an opportunity for public comment and discussion. There will be consultation and discussion before the Government come to a decision. There would be no occasion for a public inquiry at the moment.

Mr. George Thomas: Is the Secretary of State aware that when there was similar conflict over Pembrey I ensured that there would be a public inquiry and that it is most satisfactory for the Government if the public feel that their case can be fully heard at a public inquiry?

Mr. Peter Thomas: The right hon. Gentleman will appreciate that there was no public inquiry until a decision had been taken by the Government. It was after a Government decision had been taken that there was a public inquiry. The position now is that no decision has been taken.

Mr. John Morris: Is the right hon. and learned Gentleman not aware that the Secretary of State for Wales instituted an inquiry into Pembrey when it was merely a proposal? There is no difference between then and now. Is he not aware that the Nugent Committee adopted a cavalier attitude to the people of Pembrokeshire by not consulting them in any way before the proposal emanated, in its report, of a move from Lulworth to Castlemartin?

Mr. Peter Thomas: The right hon. and learned Gentleman must know that there was a proposal by the Government of the day about Pembrey. It was following the Ministry of Defence proposal that the inquiry was held. No proposal has been put forward by the present Government about Castlemartin. A proposal has been put forward by a committee which is now being considered.

Hospital (Bridgend)

Mr. Padley: asked the Secretary of State for Wales whether a site has now been acquired for the proposed new hospital at Bridgend; when he expects work to start on its erection; and whether the will make a statement.

Mr. Gibson-Watt: A site has been chosen and the process of acquisition is in train. Work on the new hospital is planned to start in 1977.

Mr. Padley: I am glad to hear that work is likely to start in 1977. Does the hon. Gentleman realise that since his right hon. and learned Friend replied to me on 26th September, the Government have announced a £100 million cut in capital expenditure on hospitals, schools, etc.? Will the hon. Gentleman give me an undertaking that the rephasing of Government expenditure on hospitals and schools will not delay still further this necessary hospital at Bridgend?

Mr. Gibson-Watt: My information is that the new hospital at Bridgend will


not be affected by that to which the hon. Gentleman refers.

Wrexham Bypass (Gresford Colliery Roundabout)

Mr. Ellis: asked the Secretary of State for Wales what further action he now proposes in relation to safety at the Wrexham bypass roundabout, near Gresford Colliery.

Mr. Peter Thomas: Larger and additional traffic signs are being provided. The need for further measures will be considered when investigations into the recent tanker accident are completed.

Mr. Ellis: Is the right hon. and learned Gentleman aware that ordinarily I would not, on the Floor of the House, have raised a question about a roundabout in my constituency? However, following several accidents within a few months, including a fatality, a coroner's jury rider about the lack of safety at the roundabout and a disastrous occurrence a few weeks ago, when the road had to be closed for nine hours, and having written twice to the Secretary of State, I want to express the serious concern of my constituents about the state of affairs at the roundabout. Will the right hon. and learned Gentleman accept the seriousness of the position?

Mr. Thomas: Yes, certainly. I accept that people are regarding the matter with great seriousness. I am aware of only two accidents at the roundabout since it was opened to traffic in March 1973. I am aware of the tragic accident on 27th May and the overturning tanker on 30th October. I intended to write to the hon. Gentleman about the general situation when I had completed my investigations into the tanker accident.

Mr. Carter-Jones: Will the right hon. and learned Gentleman take it from me that my hon. Friend the Member for Wrexham (Mr. Ellis), who is my Member of Parliament, will receive a tremendous amount of support in Wrexham? The alleged road improvement is now so dangerous that the public of Wrexham and the surrounding area avoid it. Does the right hon. and learned Gentleman accept that whoever designed the roundabout must have had an almighty bad headache on the morning he did so?

Mr. Thomas: I have considered the matter. The roundabout, as I understand it, has been constructed to standards which apply throughout the United Kingdom. I have already announced that remedial measures are being taken. We shall consider whether any further measures need to be taken in the light of the investigations into the recent accident. The police are satisfied with the measures which I have just announced.

British Transport Decks Board

Mr. Roy Hughes: asked the Secretary of State for Wales whether he has had any recent discussions with the British Transport Docks Board.

Mr. Peter Thomas: No, Sir.

Mr. Hughes: Does the right hon. and learned Gentleman appreciate that the South Wales ports have the best profit record of any group of ports in the British Isles over the past decade? Does he not feel that that constitutes a considerable argument in favour of a major port development at Uskmouth, particularly in view of the need to make the Spencer Works, with its iron ore handling facilities, fully integrated? Does he agree that the only thing that is standing in the way of such development is the political prejudice of the Government, as they were so anxious to authorise the development of the port at Bristol?

Mr. Thomas: I agree with what the hon. Gentleman says about the profitability of the South Wales ports. Any proposal for a major new port development in South Wales is primarily a matter for the British Transport Docks Board. The hon. Gentleman is totally wrong when he suggests that the only thing standing in the way of new development is Government prejudice. I believe that the hon. Gentleman has been in touch with the board and that it has explained fully its views to him in a letter from its chairman.

Mr. Gower: Will my right hon. and learned Friend treat this matter with some caution? I have met some people who have long experience of the South Wales docks. They have great doubts about the Uskmouth proposal and prefer Barry as a site for this sort of venture.

Mr. Thomas: The British Transport Docks Board is fully aware of the conflicting views which are held about this matter.

M4

Mr. John Morris: asked the Secretary of State for Wales whether he will make a statement on the progress of the M4 in South Wales.

Mr. Peter Thomas: All four of the inspectors' reports on the section of the M4 between Groes and Coryton have been received, the last of them only in September. As I have previously promised, I am considering all four together and I hope to announce my decision on them early in the New Year. Tenders for the Pontardulais Bypass should be invited early in 1974, and I am giving the highest priority to the outstanding statutory procedures and preparatory work for all the remaining sections.

Mr. Morris: Is the right hon. and learned Gentleman aware that the delay in completing the statutory procedures of fixing the line for the M4 is being regarded in South Wales as an alibi? It is thought that the real reason for the delay is the Government's public expenditure cuts in the summer. Is the right hon. and learned Gentleman aware that the delay is causing misery to hundreds of people? How much slippage has there been in the forecast date of the starting of the road to Port Talbot and the West? Is 1976 still the operative date? It is in the interests of industry as a whole, and the steel industry at Port Talbot in particular, that the road be completed as soon as possible.

Mr. Thomas: I agree with the right hon. and learned Gentleman about the importance of the earliest possible completion of the M4. I can assure him that the cuts in public expediture which were announced earlier this year will have no effect on the motorway. The delay has been occasioned solely because of the protracted procedures which have had to be gone through by way of public inquiry. There has been a demand, which the right hon. and learned Gentleman will know about, that sections should be considered together and not piecemeal. The right hon. and learned Gentleman has taken part in the

inquiries. None of the submissions which have been made has had any other effect than causing delay. My anxiety is to come to a conclusion as soon as possible and to have the end of the motorway finished as soon as possible. It is impossible now to be firm about a completion date.

Mr. Gwynoro Jones: Will the right hon. and learned Gentleman apply his mind to the latter part of my right hon. and learned Friend's question? The Government and the Welsh Office in successive statements during the past three or four years have stated that 1976 will be the completion date for the Pontardulais Bypass. Will he tell us whether that still is so, and if not, why not?

Mr. Thomas: I have every hope that the Pontardulais Bypass will be finished by the end of 1976. However, because of continuing procedural uncertainties I am unable to forecast completion dates for the remaining sections. It is my intention to finish the motorway as soon as possible. There will be no delay by the Welsh Office.

Employment (Flintshire)

Sir A. Meyer: asked the Secretary of State for Wales how many new job opportunities in Flintshire have been notified to him since 1st January 1973.

Mr. Peter Thomas: About 1,050.

Sir A. Meyer: Does my right hon. and learned Friend agree that this is but the tip of what looks like a pretty sizeable iceberg? Does not this great expansion in job opportunities in Flintshire correct the false picture which has been put out by an excessively gloomy report on the way from the task force? Is it not a hopeful sign that for the first time for a long time people living in Wales but working in England are now being lured back to work in North Wales?

Mr. Thomas: I do not think that the area is in any way served by gloomy prognostications. The figures I have given indicate a start, and I am sure that there is more to come. Quite a bit of activity is taking place which promises added employment. As my hon. Friend will appreciate, the figure of unemployment in Flintshire generally at the moment,


despite the higher figure in the Rhyl area, is 3·1 per cent., which is below the Welsh national average.

Mr. Barry Jones: How many of these jobs for men are at wage rates comparable with those in the steel industry? Will the Secretary of State accept that the best way to dispel gloom in East Flintshire is to say that the Government will keep the jobs in the steelworks?

Mr. Thomas: So far this year approved new building schemes and applications to the Department of Trade and Industry for selective financial assistance will provide 550 jobs, of which about half are for men. In addition, Hawker's expansion at Broughton promises a further 500 jobs, most of which will be for men.

Rate Support Grant

Mr. Roderick: asked the Secretary of State for Wales what representations he has received on the proposals to change the level of rate support grant.

Mr. Peter Thomas: I have received representations about the possible effects on Welsh local authorities of proposals now under consideration for the establishment of a new rate support grant system from a number of hon. Members, the Welsh Counties Committee of the County Councils Association and one of the new Welsh counties.

Mr. Roderick: Will the right hon. and learned Gentleman accept that there are grave misgivings about the Local Government Bill, which is to be read a Second time today? Is he further aware that we expect him to hold urgent talks with the Secretary of State for the Environment, who has forecast as much as a 60 per cent. increase in rate contributions from electors and residents in Powys? Does he appreciate that we did not want Powys? He forced it upon us. Now he will not support it financially. Does the Secretary of State support the forecast made by his right hon. Friend?

Mr. Thomas: I can certainly tell the hon. Gentleman the position is that a new formula for the distribution of rate support grant is still under consideration. I do not expect that the figures he has mentioned for Powys will be anything like material.

Mr. Elystan Morgan: Does the right. hon. and learned Gentleman appreciate that the formula is spelled out in Schedule 2 of the Bill that we shall be discussing later today and that, using that formula, it is the calculation of the treasurers of the eight new counties in Wales that Wales will lose no less than £7·8 million in 1974–75? Has he made his own calculation? If so, does it tally with that calculation? If he accepts the calculation, is he not shocked by it? What does he intend to do about it?

Mr. Thomas: It is far too early to say what the precise effect of the new formula will be in different areas. What we have in mind is that the new grant distribution should be accompanied by measures to offset the effect of the rate burden in any areas which may lose grant. We intend to introduce a much improved rate rebate scheme to benefit the less-well-off domestic ratepayers. We propose increasing the rate of grant from 75 per cent., to 90 per cent., which will be of particular benefit in Wales.

Hospital Building

Mr. Coleman: asked the Secretary of State for Wales what Welsh hospital building projects are affected by phase 3 of the counter-inflation proposals of Her Majesty's Government.

Mr. Gibson-Watt: The hospital building programme will be adjusted to take account of the rephasing announced by the Government last month. The detailed effect on individual schemes will depend on the outcome of the study now being prepared by the Welsh Hospital Board.

Mr. Coleman: Will the hon. Gentleman give a categoric assurance that no project concerned with fire precautions in hospitals, especially in mental hospitals, will be delayed under phase 3? Will he also look into the urgency of providing a new pharmacy at Neath General Hospital? The existing pharmacy constitutes a hazard from the point of view of escape in the event of a fire.

Mr. Gibson-Watt: I shall look specifically into the point the hon. Member has raised because I do not have the answer this afternoon. The new pharmacy at Neath General Hospital will be started in 1974 instead of in the last quarter of this year.

Mr. Padley: While I welcome the hon. Gentleman's assurance that he will look into the question of fire precautions in mental hospitals, may I ask him to consider the position in Parc Mental Hospital, near Bridgend, where there is reason to fear that expenditure cuts will take place? Will he also look into the position relating to hospitals at Maesteg and Bridgend, where, again, there is reason to fear that there will be phase 3 cuts in necessary expenditure—necessary in view of the absence of the new hospital to which I referred earlier?

Mr. Gibson-Watt: Yes, and I will write to the hon. Gentleman.

Civil Servants (Dispersal)

Mr. Michael Roberts: asked the Secretary of State for Wales what discussions he has had with the Cardiff City Council designed to ensure that adequate arrangements are made for reception of the civil servants to be transferred to the Cardiff area from the Ministry of Defence and the Companies Registry in London.

Mr. Peter Thomas: My Department is maintaining close contact with the city on all aspects of planned or possible dispersals of civil servants to the Cardiff area.

Mr. Roberts: Is my right hon. and learned Friend aware of the welcome given to the announcement about the Companies Registry being transferred to South Wales? Is he further aware that there will be grave disappointment if this is not followed by further announcements on the dispersal of civil servants to South Wales, because of the enormous potential in the area?

Mr. Peter Thomas: I am fully aware of the welcome that was given to that announcement. The Government are confident that the decision was a right one. I am also well aware of the attractions of the City of Cardiff in any dispersal policy and of the splendid job the city is doing in making these attractions known.

Mr. George Thomas: Is the Secretary of State aware that the people of Cardiff are somewhat perturbed at the delay in transferring these organisations? Is he further aware that these decisions were taken by his predecessor in 1969 and we

expect him to show a little greater sense of urgency?

Mr. Peter Thomas: I cannot accept what the right hon. Gentleman says. Certainly the decision about the Companies Registry was taken by this Government.

Mr. Callaghan: The Secretary of State says that the decision was a right one. Has he studied the special pleading going on to prevent the transfer of the Companies Registry to Cardiff? Will he give the House an unqualified assurance that this transfer will take place?

Mr. Peter Thomas: I have studied the concern that has been expressed about the move from London of the Companies Registry office. That is why I said that the Government were confident that the decision was a right one.

Hospital Staffs

Mr. Probert: asked the Secretary of State for Wales to what extent the hospitals in Wales are affected by staff shortages.

Mr. Gibson-Watt: It is not possible to give a generalised answer, since the incidence and effect of staff shortages vary If the hon. Member has any particular hospital or particular category of staff in mind I will gladly look into it.

Mr. Probert: In view of the most unfortunate experience of one of my constituents at the very large new hospital at the Heath—a report of which the hon. Gentleman has given me, for which I am grateful—and which is no doubt due to staff shortages, medical, and otherwise, will he make sure that in future the smaller hospitals, particularly in the valleys, will not be closed? Does he agree that they have a valuable contribution to make to the local communities and that staff shortages do not always exist in them to the same extent as in the larger hospitals?

Mr. Gibson-Watt: The hon. Gentleman has raised a number of separate points. I am sure that the first point he raises refers to Mrs. Higgs. If this is the case, I can only say about that sad occurrence that shortage of staff was one of the reasons why her operation needed to be postponed. The general question of the closing of smaller hospitals in the valleys


and elsewhere is a matter which this and previous Governments have gone into with great care and a good deal of concern. I can assure the hon. Gentleman that this Government will continue to take this attitude.

Housing

Mr. Gwynoro Jones: asked the Secretary of State for Wales if he will make a statement on housing progress in Wales.

Mr. Alec Jones: asked the Secretary of State for Wales how many houses were built in Wales in the private and public sectors in the first nine months of 1973; and how this compares with comparable periods from 1966 to date.

Mr. Gibson-Watt: In the first nine months of 1973, 2,558 houses were built in the public sector in Wales and private house completions totalled 8,412. The data for corresponding periods from 1966 will be circulated in the OFFICIAL REPORT. The downward trend in house completions which began in 1967 has not yet been halted, but I am glad to say that completions of houses in the private sector reached a record level in 1972, that more private houses are now under construction than at any other time, that local authority housing approvals this year are two-and-a-half times higher than for the comparable period last year and already exceed the total for 1971, and that house improvement activity in both public and private sectors has never been exceeded.

Mr. Gwynoro Jones: I thank the hon. Gentleman for that reply to an adjournment debate! Looking at the figures over the last three years, does he not agree that a reduction, on average, of about 4,000 houses per year on the pre-1970 figure is quite disastrous, that the reduction has been of the magnitude of 50 per cent. on the public sector, and that he would have to go back to the 1947 period to find a lower figure than the one achieved in 1972? Will he now say when the present Government expect the housing figure in Wales to reach 20,000, as it did in 1967?

Mr. Gibson-Watt: I am sure that every hon. Member agrees that one could juggle with the figures. The real prob-

lem is that of human need. If we take the total number of houses in the private and public sectors, and the number of houses improved and therefore kept in the housing sector, the figures show that there were 25,893 in 1970 and 42,621 in 1972.

Sir A. Meyer: Is my hon. Friend aware that in my part of Wales we regard the prospect of any more houses being built as a thorough curse? Does this not show the utter falsity of global housing figures?

Mr. Gibson-Watt: I think that what my hon. Friend the Member for Flint, West (Sir A. Meyer) is saying about global housing figures has a great deal of common sense in it. One cannot judge the problems of one area of Wales by looking at the global figure.

Mr. Kinnock: Will the Minister judge the problems of my area of Wales and those of my hon. Friends who represent South Wales valley constituencies? Will he recognise that the disaster that is being caused by not building houses is breaking hearts and homes in the valleys? Young families cannot afford private sector houses, they cannot afford to buy old houses to renovate because of rising costs and rising prices presided over by the Conservative Government, and they now have to live separately and start their married life in that sort of depressing atmosphere.

Mr. Gibson-Watt: Approvals in the public sector are more encouraging, and no doubt if I were to look at the figures in the constituency of the hon. Member for Bedwellty (Mr. Kinnock) they would be equally encouraging.

Mr. Elystan Morgan: Will the Minister appreciate that in a period of two and a half years the Labour Government were able to raise the level of housing in Wales from 13,000 to 20,000? Why is it that at present, six years after the events of 1967, we are experiencing in Wales a lower level of house-building in the public sector than we have had in any year since 1946?

Mr. Gibson-Watt: The hon. Gentleman refers to a figure of 20,000. I remind him that in 1970, when the Labour Government left office, the number of houses under construction in both


the public and the private sectors was 16,609 and that for the first nine months of this year the figure was 20,733. He should read the figures.

Following is the information:

The number of dwellings completed in the first nine months of each year since 1966 is as follows:


Year
Public Sector
Private Sector
Total


1966
6,882
6,911
13,793


1967
8,391
6,747
15,138


1968
7,116
7,550
14,666


1969
5,797
6,953
12,750


1970
5,321
6,212
11,443


1971
4,606
6,795
11,401


1972
3,271
7,956
11,227


1973
2,558
8,421
10,979

Caswell, Swansea (Planning Appeal)

Mr. Alan Williams: asked the Secretary of State for Wales when he expects to announce his decision on the planning appeal relating to the building of houses near the cliffs at Langland, Swansea.

Mr. Peter Thomas: There is no appeal before me in respect of housing at Lang-land and I assume the hon. Member is referring to the proposal to build houses at Summerland, Caswell, about which a public local inquiry was held on 16th October. I am awaiting the inspector's report and I will announce my decision as soon as I have considered it.

Mr. Williams: Will the Secretary of State join me in condemning the attempts by the developers at the inquiry to discredit everybody who dared to oppose their application? Will he also recognise that this application is in the worst tradition of parasitic exploitation by absentee landlord interests? Will he bear in mind that, having defeated the Beaufort Estates in previous attempts to exploit common land in Swansea, the people of Swansea fully support the Swansea City Council in saying "No" to the rape of Gower Cliffs?

Mr. Thomas: I do not intend to make any remarks pending the inspector's report. When I have seen the report I shall announce my decision.

Public Expenditure

Mr. Elystan Morgan: asked the Secretary of State for Wales if he will

now issue a White Paper giving the fullest and most up to date information concerning the effects upon Wales of the Chancellor's statement of 21st May on his plans for the reduction of public expenditure.

Mr. Peter Thomas: I refer the hon. Member to the reply I gave to a similar Question on 13th June.—[Vol. 857, c. 340.]

Mr. Morgan: Does the Secretary of State agree that it is now high time that the new local authorities in Wales were in a position to know what advances they will be able to draw from central Government when they commence their duties in April next? Will he confirm what he has refused to confirm up to the present, namely, that in 1974–75 sewerage schemes in Wales will be cut by 2¾ million, and that that information has already been given by the Welsh Office to a House Committee?

Mr. Thomas: The Government accept that the local authority expenditure must continue to grow, but the rate of growth recently has been above that of public expenditure as a whole, and it is necessary for there to be some restraint on less essential items. The hon. Gentleman will know that a circular was sent to local authorities on 8th June indicating the savings which the Government would expect to be achieved in that expenditure.

Oral Answers to Questions — TRADE AND INDUSTRY

Coal

Mr. Golding: asked the Secretary of State for Trade and Industry what is his policy towards expanding the British coalmining industry.

Mr. William Hamilton: asked the Secretary of State for Trade and Industry if he will now announce plans for the extended use of coal and its exploitation, in view of the prospective fuel shortage.

The Minister for Industry (Mr. Tom Boardman): My right hon. Friend told the House in his statement on 24th October that we were discussing with the National Coal Board its plans for the further development of the coalmining industry. These discussions will inevitably be affected by the decision of the


Executive of the National Union of Mineworkers to ban overtime. The effect that such decisions will have upon these plans must, at this stage, be uncertain.

Mr. Golding: Is the Minister aware that the possibility of oil rationing makes the rapid and immediate expansion of the coalmining industry imperative? Is he further aware that we shall not achieve an expansion of the coal industry without a substantial increase in the pay of coal miners?

Mr. Boardman: The hon. Gentleman must recognise what the present Govenment have done for the coalmining industry in the advances of grants to provide better redundancy terms and in making better pension schemes. In return, we have received from the coalmining industry an assurance of security of supply. I hope the hon. Gentleman will support the plea of the National Coal Board that at a time when we are facing energy problems the miners should not inflict on this country the shortage which will inevitably follow if they go ahead with the decision that they have announced.

Mr. Skeet: As this country is in an energy crisis, may I ask my hon. Friend to take a leaf out of the American book and encourage the private sector to enter further into mining to produce the coal required for electricity?

Mr. Boardman: I note what my hon. Friend has said.

Mr. Skinner: Referring to the suggestion by the hon. Member for Bedford (Mr. Skeet) about developing the private sector, does the Minister realise that firms like the Cementation Company are already offering jobs at £15 a day, and that the National Coal Board in some areas is in fact employing such people? Does he not understand that there must be something wrong with a system that allows outside contractors to work alongside miners at twice their wages and then him to attack the miners for what he calls blackmail? What sort of a set-up is that?

Mr. Boardman: I hope that the hon. Gentleman will therefore give his wholehearted support to the Government's counter-inflation policy, which produces for the miners an average increase of 13 per cent., which will enable those working

full-time on the coal face with normal overtime to earn over £50 a week. I believe that the Government have made fair offers to the coal industry and that the NCB has put forward proposals which members of the National Union of Mineworkers should consider individually.

Mr. William Hamilton: What conceivable relationship, as suggested in the Minister's original answer, is there between the decision by the National Union of Mineworkers to ban overtime and the long-term possibility of developing our indigenous fuel resources? Will he stop this nonsense and realise that the point made by my hon. Friend the Member for Bolsover (Mr. Skinner) is substantial, and requires an answer? If we are to have a counter-inflation policy it must be fair and apply to everybody.

Mr. Boardman: The National Coal Board has put forward its long-range plan, which we were in the course of discussing with the industry. The plan has been discussed with the unions. It was and is a constructive plan, which provides for expansion of certain areas of the coalmining industry. Unfortunately, the action taken, so far as it results in a contraction of parts of the industry, must inhibit elements of that long-range plan. It would not be realistic, at any rate until we are able to see a little more clearly what will happen, to discuss the long-range plan while at the same time there is a contraction which will flow if the overtime ban is implemented in the way that is threatened.

Several Hon. Members: rose—

Mr. Speaker: Order. Hon. Members must allow me to move on to Questions to the Attorney-General, which should be not later than 3.20 p.m. We are already two minutes late.

Oral Answers to Questions — JURORS (OCCUPATION AND BACKGROUND)

Mr. Douglas-Mann: asked the Attorney-General whether he will publish the text of a communication from the Lord Chancellor to the Common Serjeant indicating his wish that Treasury counsel prosecuting at the Central Criminal Court should challenge or consider challenging jurors whom such counsel consider, from the knowledge available to the prosecution of the occupation and background of


jurors, to be potentially sympathetic to defendants.

The Attorney-General (Sir Peter Rawlinson): It is not the practice to publish communications between my noble Friend and members of the judiciary. My noble Friend has never expressed such a wish to any member of the judiciary or anyone else, since the opinions attributed to him in the Question are emphatically not his.

Mr. Douglas-Mann: Whilst accepting that assurance, may I ask the Attorney-General to inform the House, first, whether any advice, official or unofficial, has been given to prosecuting counsel regarding the challenging of jurors?
Secondly, will he publish the terms of the administrative arrangement made by the Lord Chancellor in July under Section 32 of the Courts Act, which deprives the defence of information relating to jurors' occupations but leaves it available to the police and, consequently, counsel for the prosecution?
Thirdly, will the right hon. and learned Gentleman tell the House how he justifies the discrimination involved in giving such information to one side or the other?

The Attorney-General: First, if the direction has not been published—I think that it has—I shall see that it is published. However, it is wrong to think that information is denied to one side and not to the other. Neither the prosecution nor the defence now knows the occupations of jurors.
As the hon. Gentleman will appreciate, Treasury counsel are appointed by me. They bear the bulk of prosecutions, but they are also in private practice. There has been concern that the right to challenge has been used in, for instance, fraud cases, where a person who has or appears to have experience or knowledge of bank accounts or bookkeeping has been challenged. This is not helpful to the administration of justice. In those circumstances, Treasury counsel may, if they wish, use their rights to redress the balance and have a properly constituted random jury.

Sir Elwyn Jones: As those who belong to certain professions and occupations are disqualified from serving on juries, is it not desirable that information about the occupations of potential jurors should be made known? Is the right hon. and

learned Gentleman satisfied that there is no discrimination in favour of the prosecution to the detriment of the defence in the proposed or already issued administrative order?

The Attorney-General: I am quite satisfied on that last matter. Indeed, prosecuting counsel may have good reason to stand by someone who he feels, having been able to check his or her name and occupation, should be stood by in a particular case. The removal of the list of occupations does not enable that to be done. Therefore, it falls equally between the prosecution and the defence.
Those persons referred to in the first part of the right hon. and learned Gentleman's supplementary question should not be on the jury list at all. It is for the authorities concerned to ensure that those persons do not appear in the panel of jurors.

Oral Answers to Questions — TRADE UNIONS (NATIONAL INDUSTRIAL RELATIONS COURT FINES)

Mr. McBride: asked the Attorney-General if he will specify the occasions on which fines have been levied on the funds of trade unions.

The Attorney-General: This information is available only in relation to fines for contempt of court imposed by the National Industrial Relations Court. Such fines have been imposed on five occasions only. I will give particulars, which are too long for oral answer, in the OFFICIAL REPORT.

Mr. McBride: I want to pat three brief points to the right hon. and learned Gentleman. First, is he aware that the political funds of my trade union—the Amalgamated Union of Engineering Workers—are separate and distinct moneys from those forming the assets proper of the union, and are not used to meet the day-to-day expenses incurred in its promotional work?
Secondly, political funds are used for political purposes only. These are described and, in my opinion, supported and buttressed, by the judgment in Magee v. Lovell in 1874 in which it was said:
Words which form an essential part of the description cannot be rejected as falsa demonstratio."


Lastly, is the right hon. and learned Gentleman aware that the political levy is not collected, nor can it be construed, as forming part of the assets, including everything that is available the meet the liabilities? [HON. MEMBERS: "Too long."] Even if the Tories do not like it, they should be told.

The Attorney-General: I will not debate with the hon. Gentleman the legal precedent that he cited. These fines have been imposed upon this union for contempt of court and the moneys sequestrated under the order have been taken to meet those fines. So long as any party to litigation is in contempt of court, then, according to means, the collection of any fines imposed must and will prevail.

Mr. C. Pannell: Is the Attorney-General fully seized of all the facts in this case? The political levy of a trade union constitutes funds held in trust on behalf of the Labour Party. [Interruption.] Was it intended throughout, or would hon. Gentlemen opposite say that it was intended when the Industrial Relations Act was enacted, that it should be an attempt to get at the political funds of the Labour Party? Surely it was never so intended. This money was held in trust. The right hon. and learned Gentleman should address his mind to that.

The Attorney-General: Any party to any proceedings who is in contempt of court is liable to penalties and fines. There is no need to be in contempt of court. A person who is in contempt of court must face the penalty. This is the penalty that has been imposed. The answer is for that party to come to the court, argue his case, and get out of contempt.

Mr. Ashton: Is it not a fact that Sir John Donaldson in taking that £75,000 was guilty of gross incompetence if he did not know where the money came from, and that if he did know—

Mr. Speaker: Order. That kind of comment can be made only by substantive motion, and not in a supplementary question.

Mr. Ashton: With respect, Mr. Speaker, if this was not a case of not knowing where the money was coming from—[HON MEMBERS: "Withdraw."]—was it

not a question of a political fine, or political corruption?

The Attorney-General: It is nothing of the kind, and the hon. Gentleman knows it. This party did not participate in these proceedings and it was therefore held to be in contempt of court. As a result, and in the same way as any other person in this country who is in contempt would be dealt with, it has had a fine imposed upon it. The court will continue to impose fines on any person who is in contempt of the court, because that is the law of the land.

Sir Elwyn Jones: Will the Attorney-General inform the House who made the decision to select this fund from other sources of finance that were available, and on what principle this fund was selected?

The Attorney-General: This was an order of the court. It was a sequestration order under which £100,000 of the union's funds were seized, and out of that total a tine of £75,000 was imposed. It was an order of the court.

Sir Elwyn Jones: I fear that the Attorney-General has not begun to answer my question. Who, in the administration, decided which fund to go for, and on what principle?

The Attorney-General: It is not a question of being done by the administration. It was an order of the court to seize such assets, out of which the fine should be paid. That was an order of the proper officer of the court.

Mr. Orme: Is the Attorney-General aware that that decision has probably robbed the Labour Party of about one quarter of its total expenditure at the next General Election, and that it is money which members of my union have contributed freely? Is the Attorney-General also aware that the 1913 Act protects that money from use as general funds? Money subscribed by members for general purposes is not allowed to be used for political purposes, and therefore this money cannot be replaced. How can the Attorney-General defend a political act such as this?

The Attorney-General: It is not a political act. I repeat that if this union is in contempt of court it has no right to think that it can be treated differently


from any other person who appears before the court. These are assets of this union, and they were seized to answer the fine.

Mr. John Morris: Is the Attorney-General really saying that an officer of the court specially chose this political fund?

The Attorney-General: I have said that the order was made by the court. It is not a matter for me, or for any other Minister. It is a matter for the order of the court, and the court made the order imposing this fine. There was no need for this party to be in contempt, and no need for it to lose these sums of money. It is about time that the members of the union appreciated that fact.

Mrs. Kellett-Bowman: Is my right hon. and learned Friend aware that Hugh Scanlon, who has been acting foolishly and frittering away his members' funds, was elected by only 6·7 per cent. of the membership?

The Attorney-General: I do not have those statistics in mind, but I do have in mind what many people think, namely, that it is unnecessary for these sums to

£


(1) 13th April 1972
…
Heaton's Transport (St. Helens) Ltd. v. Transport and General Workers Union
…
…
…
…
…
…
5,000


(2) 20th April 1972
…
Heaton's Transport (St. Helens) Ltd. v. Transport and General Workers Union
…
…
…
…
…
…
50,000


(3) 8th November 1972
…
Goad v. Amalgamated Union of Engineering Workers
…
5,000


(4) 8th December 1972
…
Goad v. Amalgamated Union of Engineering Workers
…
50,000


(5) 22nd October 1973
…
Con-mech (Engineers) Ltd. v. Amalgamated Union of Engineering Workers
…
…
…
…
…
…
75,000




Total
…
…
…
…
…
185,000

ELECTRICITY SUPPLIES

Mr. Palmer: (by Private Notice) asked the Secretary of State for Trade and Industry what action he is taking over the voltage reductions and limitation of public electricity supplies now resulting from the decision of the industry's supervisory engineering staffs not to work outside normal hours.

The Minister for Industry (Mr. Tom Boardman): So far there have been only minor voltage reductions, and the only limitations on supply have resulted from a small number of breakdowns in the distribution system followed by delays in reconnecting supplies. I have urged both sides to explore again how they can

be lost to the members of the union by the conduct of their officers.

Mr. S. C. Silkin: Is not the Attorney-General fully aware that he has not answered either of the questions asked by my right hon. and learned Friend the Member for West Ham, South (Sir Elwyn Jones)? Is it not right that the order of the court was simply one of sequestration, followed by a fine, and that therefore somebody must have made the decision where the money should come from? We are asking who does that, and on what principle.

The Attorney-General: The Question which I was asked to answer was about fines levied on trade unions. I repeat that this was an order made by the court. An officer of the court, for whom neither I nor any other Minister is responsible, made the order out of which these fines were paid.

Mr. McBride: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Attorney-General's answers, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

Following is the information:

reach a settlement within the terms of the stage 3 code.

Mr. Palmer: In view of the Secretary of State's overall responsibility for maintaining the continuity of electricity supplies, may I ask the hon. Gentleman to urge his right hon. Friend to take notice of the representations made by the Electricity Council and the Central Electricity Generating Board that the technical staffs' out-of-hours payment which was negotiated 11 months ago should be honoured? Furthermore, should the arbitrary intervention of a date on the calendar be allowed to compel a responsible section of the staff of this industry to take industrial action in order to obtain justice?


Is not the real difficulty the inflexible, restrictionist attitude of the Government under the Pay Code? That is the real difficulty surely, and nothing else at all.

Mr. Boardman: No, Sir. Contrary to what the hon. Gentleman said, there is considerable flexibility in the code within which to operate. The agreement that was reached after the standstill had started could be implemented under stage 3. Part of it could be implemented straight away by the use of the flexibility margin, and the remainder, if the union so wished, could be implemented on the anniversary of the agreement by using part of the 7 per cent. margin.
But there are other areas which the parties should get together to discuss. There is the unsocial hours provision which they should discuss, and they should put joint representations to the Pay Board on anomalies and relativities. I urge that this most responsible group of men should open discussions with the council to see whether exploring those lines enables the council to go some ways towards meeting their points.

Mr. Skeet: Can my hon. Friend say what is the percentage of total coal stocks available under the control of the CEGB, to avoid picketing, and also what capacity of electricity is available?

Mr. Boardman: I cannot, off-hand, tell my hon. Friend what the quantities are, but the House knows that the power stations have substantial coal stocks.

Mr. Skinner: Will the hon. Gentleman exercise his mind on the possibility of solving this dispute by using flexibility to the extent that it was used in the case of the Glasgow firemen? Would that provide a solution?

Mr. Boardman: As I understand it, the solution is within stage 3, and there can be no question of a settlement of this dispute outside it. I was saying that there is substantial flexibility within stage 3, and I hope that the union and the industry will consider it again, because they have not really sat down to consider some of these points in order to see how close they can get to a settlement.

Mr. Rost: As it is impossible to impose rota restrictions satisfactorily enough to prevent disruption to industry and essential

services, will my hon. Friend assure the House that he will apply emergency powers promptly to ensure that less essential supplies for such things as display lighting and television are switched off in order to ensure that adequate resources are available for industry and essential services?

Mr. Boardman: That would not be a matter for me, but, at a time when there are various pressures upon our energy supplies upon which the wellbeing of the country depends, I ask whether it is consistent with the responsible attitude which this group has adopted in the past that it should continue this action now.

Mr. Dalyell: May we be clear as to precisely what the Minister sees his own responsibilities to be in the matter, or is it all to be left to the flexibility of the Pay Board?

Mr. Boardman: I have urged both sides to discuss again those areas within the pay code which contain considerable flexibility to see whether a satisfactory settlement can be reached therein.

Mr. Dalyell: What are the hon. Gentleman's responsibilities?

Mr. Evelyn King: Would it not be prudent also to look at electricity supply in the long term? Is it not a fact that the Central Electricity Generating Board, which ought to have ordered reactors long ago, has now, in a measure of panic, ordered American reactors? Is it not a fact that those reactors are less efficient and less safe than British reactors, and that if that decision were implemented we should have wasted £100 million and many years of devoted work by British research scientists? Is my hon. Friend further aware that these American reactors are, on the evidence we have, unsafe? Will the Government consider reversing that decision, if it has been taken?

Mr. Boardman: I assure my hon. Friend that no such decision has been taken, contrary to reports in parts of the Press. The position is that there is a Nuclear Power Advisory Board, which was reported to the House. That board is considering the alternative systems which are available. It will in due course advise my right hon. Friend, who will then make a decision on the


choice. No such decision has yet been made. Indeed, there is a certain amount of further work to be done before my right hon. Friend will be able to have final advice on this matter.

Mr. Benn: As this dispute clearly endangers supplies at a time of general difficulty and as the dispute does not lie between the employers and the staffs involved, because they are in agreement and have been for some time, will the Minister say what his responsibility is? He is the Minister responsible for the safeguarding of supplies. Is not the flexibility that is wanted a flexibility of direct Government intervention in this dispute, instead of a shielding behind the Pay Board, which is forced to be rigid in a matter in which flexibility by the Minister is really necessary?

Mr. Boardman: If the right hon. Gentleman is suggesting that flexibility should extend to breaching the code, this would be unacceptable because the maintenance of the code is essential if we are to preserve the standard of living of the people of this country. The right hon. Gentleman asks about my responsibilities. My responsibilities are to endeavour to get the parties to reach agreement within the code and at the same time to ensure that, whatever action my be taken, the necessary contingency arrangements are made to ensure the best continuity of supplies that it is possible to do.

COAL SUPPLIES

Mr. Cormack: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration; namely,
The threat to coal supplies arising from the present situation in the coalmining industry".

I have no wish, Mr. Speaker, to exacerbate an already difficult and delicate situation, but I believe that this is a matter to which the House as a whole should have the opportunity of giving its early attention. That it is specific, important and urgent is readily apparent. It is urgent because each hour that now passes apparently brings the coal industry closer to serious disruption, if not total paralysis. It is of major public importance because anything which threatens the production of coal threatens all aspects of our daily life—industrial, commercial and social. The matter is specific because the situation which faces us has been brought about by an initiation of a certain course of industrial action this very day.

Mr. Speaker: The hon. Member for Cannock (Mr. Cormack) gave me notice last night of his intention to move his application. I already have particulars of the application, and the hon. Gentleman need not bring it to the Table.
The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent considerations, namely,
The threat to coal supplies arising from the present situation in the coalmining industry".
As the hon. Gentleman gave me notice of this matter last night, I have had plenty of time to think over the matter. I am not allowed to give my reasons, but I am satisfied that the matter raised by the hon. Member is suitable to be discussed under Standing Order No. 9.
Does the hon. Member have the leave of the House?

The leave of the House having been given—

Mr. Speaker: Under Standing Order No. 9, the motion for the Adjournment of the House will now stand over until the commencement of public business tomorrow, when a debate on the matter will take place for three hours.

Orders of the Day — LOCAL GOVERNMENT BILL

Order for Second Reading read.

Mr. Speaker: Before calling the right hon. and learned Gentleman the Secretary of State for the Environment to move the motion for Second Reading, I have to inform the House that I have selected the amendment standing in the name of the Leader of the Opposition and the names of his right hon. and hon. Friends.

3.45 p.m.

The Secretary of State for the Environment (Mr. Geoffrey Rippon): I beg to move, That the Bill be now read a Second time.
The massive reorganisation of local government which was contained in the Local Government Act 1972 is now being put into practice. This Bill is a necessary adjunct to that process. As the Green Paper "The Future Shape of Local Government Finance", Command 4741, explained, reorganisation created the opportunity, and, indeed, the necessity, for reviewing local government finance. Many people will feel that the Bill does not go far enough. Certainly it is not the last word to be said on the subject. But I hope to show the House that it represents a major advance, paving the way for future developments. This is based on the principle that the right financial framework is one in which central and local government can work as partners, each representing its proper responsibilities with the minimum of overlap and potential conflict.
Basically the Bill does four things. Firstly, it provides a system of grant designed to enable new local authorities to operate with the maximum of efficiency. Secondly, it makes important changes in the rating system, particularly in so far as it counteracts the regressive nature of the present arrangements. Thirdly, it provides for the establishment of an ombudsman system for local government, a means of investigating complaints about the administration of local government, which should prove of great value in enabling councils to do their jobs more effectively. Fourthly, it abolishes a wide

range of central Government controls over local authorities which may have been at one time or another introduced for good reason but which it is now right to dispense with.
All these proposals have been the subject of very full consultation with the representatives of local government, and I should like to thank them and, indeed, many others who have made representations which have helped to strengthen the provisions of the Bill.
I shall try to deal in turn with the four main issues—grant, rates, local ombudsmen and control. First, I should like to comment on the reasoned amendment in the name of the right hon. Gentleman the Leader of the Opposition, which criticises the Government for not providing additional sources of local finance. I reject that criticism completely, in so far as the Government do not think that this is the right time to introduce new local taxes. The system of rates, the local authorities' own tax, is well tried, well known and easy and cheap to administer. These are major advantages which have, so far at any rate, not been found in the alternative ideas which have been put forward.
No one should be surprised that the Bill contains no new taxes to replace the rates, because we made quite clear in the consultation paper issued last June why we did not propose to allow local authorities to introduce any new local taxes at this time. First, we do not think that taxes of that kind ought to be introduced at a time of pay and price restraint. Secondly, it has to be borne in mind that we are already carrying through nationally a radical reform of both direct and indirect taxation. This is not, therefore, the moment to introduce new taxes which would involve complex administration and collection. But, at the same time, I have made clear at those meetings I have had with local authority associations and others that I do not in any way rule out further discussion when the new local authorities are established and in full operation. Thus, if I may give one example, the Government have been and are giving a great deal of thought to the law relating to lotteries for charitable and other organisations, including local authorities. In order to assist public discussion of this topic, the Government


hope shortly to publish a report of an official working party which has been reviewing the position regarding lotteries and the possibility of amendments to the law.
Some people in the local authority associations have suggested that we ought, perhaps, to have a Royal Commission on local government finance when the new authorities are established. It may be that they are right. But it was the Leader of the Opposition who said that they are apt to take minutes and to waste years. As I have said, in the case of lotteries there may be measures of reform that we can take step by step, and that may be the better way to proceed.

Mr. Sydney Chapman: Does my right hon. and learned Friend agree that the crux of the problem is simply that when a Royal Commission was set up to look into the reformation of local government it should also have looked at the reformation of local government finance? Was that not the beginning of all the problems we face today, particularly over the rate support grant?

Mr. Rippon: There may be some substance in that observation but we have to face the situation as it now is, which is that successive Royal Commissions, interdepartmental committees and other bodies have tried to find a simple alternative to the rating system. I know that I have tried. So far no one has come up with anything that is reasonably practical.
In considering the Bill we have to put it in the general context of local government expenditure. This again has a bearing on what the reasoned amendment says, though how it can express the views contained in it when the Opposition do not know the figures I find difficult to understand.
I am well aware of the general concern about the level of rates next year. Some increases are inevitable because local authorities cannot avoid the increases in wages and other costs that are affecting all sections of the community. The authorities are also committed to providing steadily improving standards of education, social services, environmental protection and other desirable services.
I remind the House that we are making two changes next year which will relieve the burden on the rates. Local authorities will no longer have to meet the cost

of local health services, and they are also to be relieved of 90 per cent. of the cost of mandatory awards to students. These two changes together will reduce local authority expenditure by more than £330 million. In addition, local authorities will no longer be responsible for sewerage services, but since for the next few years these services will be financed by a charge collected for the regional water authority by the local authority I have taken this charge into account in considering the total burden of rates.
However, that still leaves large expenditure as the responsibility of local authorities, and, of course, I understand that many of my hon. Friends feel that here, too, we should have gone further. That is certainly an arguable proposition. I am among those who from time to time have said that this further relief of the rate burden in respect of certain central charges should be examined again. We have made a most substantial start. The expenditure which local authorities incur is, of course, part of the public sector and my right hon. Friend the Chancellor reiterated in the debate on the Gracious Speech last week that we are committed to containing the growth of public expenditure in the interests of the economy as a whole. I warned local authorities a year ago that they would have to limit the rate at which their expenditure was growing. I repeated that warning again following my right hon. Friend's announcement on 21st May this year. Many authorities took note of what I said but I repeat the warning now to those who need it.
Next year outside London there will be new local authorities. I well realise that they wish to start their new existence by providing high standards of service backed by adequate staffing and other facilities. However, I cannot accept, as was reported to me from various parts of the country, that it is necessary for a new district covering the area of two or three old authorities to require more staff than the total employed by the three predecessors.

Mr. Denis Howell: May I question the point that the right hon. and learned Gentleman was making a few moments ago concerning the growth of local government expenditure, which the Chancellor said last week


is to be confined to 2 per cent. or thereabouts? What is not clear to many local authorities and to myself is whether, when the Chancellor spoke of a growth rate of 2 per cent. in real terms, that means that the increased charges, high interest rates and so on facing local authorities will come out of the 2 per cent. or does the 2 per cent. exclude these factors from which no local authority can escape?

Mr. Rippon: I have put these matters in a general context. I shall shortly be making proposals to the local authority associations about rate support for next year. We are now in the middle of the discussion, and matters of this sort are being considered in connection with the formula and the total grant the Government may make available.
In putting forward these proposals I shall be assuming that local authorities will be heeding our warning and will be playing their part in containing public expenditure on things which we know they control, such as total levels of staff. On this basis I shall be proposing a rate of grant that has regard to the importance of keeping down rates but is not so generous as to encourage authorities to spend unreasonably. I shall be combining it, however, with much more generous relief to domestic ratepayers. The Government's proposal is that the present domestic element of rate support grant of 6p in the pound will be increased to a minimum of 10p with more available for those areas that may be receiving a smaller share of grant under our new formula. This 10p relief, therefore, will represent at least a 20 per cent. domestic derating overall, and for many areas it will be considerably greater.

Mr. Julian Ridsdale: Is the water rate to be derateable, because it bears hard on those with small fixed incomes?

Mr. Rippon: I shall be coming to rate rebates and whether the water rate is a rate or not. It is not for this purpose—it is a charge—but I shall come to that later.
The combined effect of the proposals I have outlined is that over the country generally increases in domestic rate burdens will be substantially less than the likely increase in earnings under phase

3, and they will be further mitigated for many ratepayers by the increase in statutory deductions from gross rateable value and under the new rate rebate scheme. I shall go on later to deal with it.

Mr. Timothy Raison: Will my right hon. and learned Friend say whether these arrangements make special allowance for those counties which lost large chunks of a high rateable value to other counties?

Mr. Rippon: I have not yet had an opportunity to describe the arrangements. Perhaps it would be best if I set out in detail what we are now in the process of negotiating and how we hope to deal with it. The actual increase will vary from area to area, and that is why there is the variable domestic element. The actual increase will be affected by whether the local authority makes its budget realistic. If it increases its expenditure beyond the level we think justifiable, its rates will have to rise, and it will have to answer to its ratepayers for that. Provided local authorities keep to the increase in public expenditure which we think justified—and that is a growth rate of 3½ per cent. in current expenditure—on their services next year, the domestic rate burdens on average should rise less than the overall increase in earnings.
Clauses 1 to 5 provide for the establishment of the new rate support grant system. To that extent they are the machinery under which we shall have to make a rate support grant order, and we cannot make the order until we have the machinery. They set the framework for annual negotiations, of the kind currently in progress. I should emphasise that our debate today does not in any way prejudge the negotiations about the precise formula to be adopted for the distribution of the total grants as between one authority or another.
I have had two informal meetings with the local authority associations to take account of representations which they and others have been making to me My officials will put revised proposals to the associations this week which will take account of discussions that I have had. Then there will be what is described as a statutory meeting at the end of November to iron out our final position. That


is why I ask hon. Members not to anticipate the precise effect on their own areas at this stage.
We have made already a number of changes in the original figures put forward in the working documents. This process must continue. I can tell the House that our proposals include a new needs element formula, based on an analysis of recent local government spending and a new level of resources element. The result will be to divert more of these two elements than before to the problem areas of cities. The House will recall that one of the criticisms last year about the distribution of the existing formula was that it failed to take sufficient account of the problems of inner city areas—such factors as reduction in population not leading to reduction in expenditure but rather the reverse because of the nature of social problems created.
That will, inevitably, mean grant losses for some areas as well as gains for others. It will not mean that the domestic ratepayer in the losing areas will suffer, because we shall use the new flexibility in the domestic element provisions to protect him from the impact. That will make a substantial difference to many people.
Domestic relief will be highest in areas where the share of grant is going down and in certain places where water re-organisation might otherwise result in exceptional increases of water supply and sewerage charges. That is why 10p is to be the minimum domestic element, bringing, in effect, a 20 per cent. derating, but in areas which lose grant there will be more relief.
We intend to issue a White Paper once our negotiations with local authorities are complete. We will then have a full discussion on those issues in the debate on the Rate Support Grant Order.
Clause 6 provides for supplementary transport grants, the background to which was set out in "Urban Transport Planning," the Government's observations on the Second Report of the Expenditure Committee, Cmnd. 5366. Transport planning, we believe, requires a mix of different measures: new roads, better public transport, better management of the existing system, appropriate restraint and parking policies. Some of these matters are dealt with in the Road Traffic Bill

which has been presented in another place. It is a broad area, on which much further discussion needs to take place. We accept that such matters need to be looked at comprehensively. In the past that was difficult because, first, the local authority organisation has not been right and, second, the grant structure has not been suited to such an approach.
The first of those problems has been put right by the Local Government Act 1972, which creates larger local authorities covering more areas for transport planning—especially in the conurbations with the new metropolitan county councils—and gives the new county councils responsibilities for public transport, as well as roads and parking.
But it seems to us that two further changes are needed. First, the new counties should develop comprehensive transport policies, and, second, a number of specific central government grants for transport should be discontinued and replaced by a new system of transport supplementary grants.
Under the Bill supplementary transport grants would be distributed to those county councils, or to the Greater London Council, whose estimated transport expenditure in a year, as accepted for grant purposes by the Secretary of State, exceeded a prescribed threshold.
Supplementary grant will be based on comprehensive programmes, not on individual schemes, and will be available for all types of local transport expenditure without distinction between capital and current expenditure or between public transport and roads. The system is described in more detail in the Department's circular 104/73, issued to local authorities in August this year, and will be introduced from 1st April 1975.
I think the new arrangements recognise that different transport policies are needed in different areas and that local authorities are best placed to decide how local transport needs should be met.
We are dealing with machinery in relation to the Bill. I am sure that the House will agree that the flexibility the new system provides, and the real opportunity it will give to county councils to determine their transport policies in the light of the operating needs of their own areas, are a great step forward and an integral part


of our general objective of placing more responsibility on local government.
Clause 7 introduces a new supplementary block grant to be paid to county councils in respect of expenditure on national parks. I remind the House that this provision is in fulfilment of the firm undertaking which we gave during the passage through Parliament of the 1972 Act that the greater part of the expenditure on national parks would in future be borne by the Exchequer.
Clause 9 extends the present power of the Countryside Commission to give financial assistance to countryside projects.

Mr. Arthur Blenkinsop: Is the Secretary of State aware that many of us welcome Clause 9 in so far as it offers independent finance to the commission? Does this mean, however, that the commission will have resources to enable it to appoint effective staff, and so on, and it is not merely a cosmetic part of operations?

Mr. Rippon: It is intended to be effective. I hope that if anything in the Bill is defective in that regard the hon. Gentleman will be available to ensure that it is not in any way cosmetic. I assure the hon. Gentleman that we think that this is one way in which we can make much more flexible the provision of financial assistance for countryside purposes and remove any unnecessary restrictions on the way in which the commission exercises its statutory functions.
Part II of the Bill covers rating. I think the House will agree that this is a crucial part of the Bill, and I should like to spend a little time—I hope not too long—explaining what we are doing and why are doing it.
The main defect of the present system is that rating is regressive and that rates do not correlate well with income levels, that those at the lower end of the scale pay more pro rata in rates than the better off. This is at the root of many of the problems that arise in the system as a whole. It is this problem that the Bill now tackles in a number of ways, first by the introduction next April of a new rate rebate scheme.
The new scheme will, in particular, extend relief far higher up the income scale than under the present rate rebate scheme introduced in 1966 by the previous administration.

It will also be able to deal much more quickly than the present scheme with changes in ratepayers' income, because rating authorities will be able to have regard to an applicant's current income instead of past income as under the current scheme.
The present scheme was introduced, as the right hon. Member for Coventry, East (Mr. Crossman) told the House on 6th December 1965 when introducing the measure, as "an interim device" to reduce the regressive impact of rates on those with low incomes. Experience of the current scheme, as our Green Paper two years ago pointed out, has revealed its main weaknesses. It is no criticism of the Opposition that these weaknesses have appeared. It was, as I said, an interim scheme. However, weaknesses have been revealed.
First, the scope of the scheme is limited. The qualifying income levels are not much above the level of supplementary benefits. They fall short of the levels of income at which rates cease to be regressive. Secondly, all those whose incomes fall within the qualifying limits, by a substantial amount or only marginally, are entitled only to the same amount of relief. Thirdly, the treatment of income from disablement pensions and that of additional members of households, such as housekeepers and relatives other than spouses, is anomalous and can cause hardship, although some relief in connection with the treatment of the income of the disabled was afforded by what is now the Rate Rebate Act 1973 introduced early this year by the hon. Member for Derby, North (Mr. Whitehead).
Those weaknesses in the present scheme will be removed by the Bill. The Bill contains enabling provisions under which I shall make regulations to introduce a new rate rebate scheme graduating relief according to income and extending entitlement higher up the income scale than under the current scheme. I intend to make these regulations immediately after this measure has received the Royal Assent.
Perhaps it will help if I indicate the outlines of the scheme. They will be as follows. The classes of domestic ratepayer eligible for a rebate under the new scheme will, in general, be the same as those eligible under the current scheme.


Domestic ratepayers receiving supplementary benefit, which includes an amount to cover their rates bill, will, as at present, generally be excluded. This is simply because the Supplementary Benefits Commission will be paying their rates, so the question of a rate rebate does not arise.
However, because of the improvements we have made this year to the rent scheme, with which the new rate scheme will be linked, there will be some people for whom rate rebates will be, as it were, a better "buy". We shall therefore be taking steps to ensure that those who are in this position know the facts and get the maximum amount of financial assistance to which they are entitled.
I am sure that the House will appreciate that this will help, not only with the local administration of both these schemes, but also to increase the takeup of benefit under both schemes, since the local authorities which receive an application for a rent rebate can at the same time check whether the applicant is also entitled to a rate rebate. Thus, an entitled person will not have to make two applications.
As under the rent scheme, a domestic ratepayer's entitlement to a rate rebate will be determined by reference to his needs and his income. The needs allowances will be exactly the same as those in the rent scheme—for example. £15·50 a week for an individual without dependent children, £20·75 a week for a married couple and for an individual with one dependent child or children, with an increase of £3 a week for each dependent child.
The definition of "income" will also be the same as under the rent scheme. This will mean, in particular, that attendance allowances for the disabled will be totally disregarded for rate rebate purposes and also the first £2 of any war or industrial disablement benefit and certain other similar payments will be disregarded. I am sure that that will be in accordance with the wishes of the whole House.

Mr. Idris Owen: Before my right hon. and learned Friend leaves the subject of support by way of rebate, may I ask whether he has considered the dilemma of people occupying rather old property—Victorian and pre-Victorian

property—who have very high maintenance costs on that property which are not adequately reflected in the assessment?

Mr. Rippon: I shall be dealing with the increase in the statutory deductions from gross to rateable value, on which my hon. Friend the Member for Essex, South-East (Sir Bernard Braine) pressed me forcibly and effectively. I am dealing now with the rate rebate scheme. This will apply generally whatever the type of house and whatever its gross and rateable value.
It will probably be most helpful for me to give some examples of how we calculate that our proposals will work in practice. In all these examples I assume that the weekly rates are £1 and that the income of the ratepayer counts entirely as income for rate rebate purposes—that is, that none of the income falls to be disregarded because it is in part made up of, say, an attendance allowance paid to a disabled person or a war disability pension.
Perhaps it would be convenient, rather than that I should give too many examples, for me to concentrate on the case of a married couple with two children. If their income is £18 a week and their weekly rates are £1, the rebate payable will also be £1. Under the current scheme the rebate is 57p a week. If their income were £26 a week, their rebate would be 62p a week—nothing under the current scheme. If their income were £30 a week, their rebate would be 41p a week—nothing under the current scheme. I think the House will agree that those are fairly substantial provisions.
No doubt the House will wish to have an indication of the likely number of domestic ratepayers who will receive the rebate under the new scheme, as well as an indication of its total cost. On the basis of the scheme which I have outlined to the House I estimate that about 3 million domestic ratepayers in England and Wales will receive a rebate in 1974–75 under the new scheme, compared with about 300,000 at present. The loss of rate income arising from the grant of the rebates could be £90 million to £95 million in that year, but the specific grant to be paid to local authorities in respect of the new scheme will be 90 per cent., in accordance with the provisions of Clause 8, instead


of 75 per cent. towards the cost of rebates granted under the current scheme. In other words, rating authorities will be reimbursed about £85 million of the £95 million loss of rate income.
I draw the attention of the House to Clause 12 of the Bill. Subject to the fact that nobody will be entitled to a smaller rebate than under the statutory schema, Clause 12 gives a rating authority powers to make its own rate rebate scheme to meet local circumstances and, in certain circumstances, to be rather more generous.
I believe that the House, and the country, will be able to judge, from what I have said, the scale of the exercise we have undertaken, the real benefits it will bring to those at the lower end of the income scale, and the way in which the action we are taking is fully consistent with the philosophy underlying our policy generally—to give help most generously where it is most required.

Mr. Kenneth Marks: Although I welcome the announcement by the right hon. and learned Gentleman about the extension of the rate rebate scheme, it does little in total about the regressive nature of rates. The 3 million people who will receive rate rebates are only 15 per cent. of the total. The man with an income of £100 a week will receive as much rebate as the man who earns £35 to £40 a week. That is the trouble about rates.

Mr. Rippon: I ask the hon. Gentleman to study a little more carefully what I have said.
However, I believe that I have misled the House in one particular. I said that 3 million people were likely to benefit from the scheme, whereas the number benefiting under the old scheme was about 300,000, but I should have said that 800,000 were benefiting under the old scheme. That means that 2,200,000 more people will benefit on the sliding scale, whereas under the current scheme one was in or out. I hope that the House will acknowledge, as the hon. Gentleman has acknowledged, that that is a substantial step forward, although I recognise that it may be said that more should be done.
Local authorities will be free to judge the position in their own areas and decide whether to take further action to meet local circumstances. That is the advantage of Clause 12. Indeed, it is an advantage of the Bill as a whole. We are trying to create a flexible framework in which we can assess the situation from one year to the next. I do not envisage that the arrangement will last in perpetuity, or even for as long as the old rate support grant formula, which was from 1950 to 1956. There is built into the Bill, as the House will want, an opportunity to make further social progress as circumstances require.

Mr. R. J. Maxwell-Hyslop: Are the income figures to which my right hon. and learned Friend refers assessable over a year or a shorter period? If they are assessable over a shorter period that is more helpful to seasonal workers, who for part of the year may have low incomes, or to staff employed by local authorities during the school term but who are on half pay during school holidays.

Mr. Rippon: As I tried to indicate, the purpose of the Bill is to provide flexibility and simpler, more effective administration. Applicants for rebate will therefore be assessed on their current income rather than on past income. It may be that hon. Members will wish to consider constituency cases in Committee, but our purpose is that the rebate should be given in accordance with the real circumstances of the ratepayers at the time they seek it.

Mr. George Cunningham: I understood the right hon. and learned Gentleman to say, a few minutes ago, that the intention was that the rate rebate would be available irrespective of the level of the rates applied. Does that mean that an objection could never be made to the effect that the accommodation a person was using was excessive for his needs? The Minister will be aware that in some of the allegedly desirable parts of London the rateable values have greatly increased, and the traditional residents are now faced with very high rate burdens. Can I take it that it will never be argued against such people that they are living in accommodation which is too highly


rated for them and that they are not, therefore, entitled to the full rebate?

Mr. Rippon: I have assumed, taking the country as a whole, that a married couple in an average house are paying £1 a week in rates. If, in the circumstances of a certain area, they are paying much more, a different calculation must be made; they receive the bigger rebate to which I have referred. The other matters that the hon. Gentleman raised, such as the question of objecting to the rateable value and what should be done about under-occupied property, do not fall within the provisions of the Bill.
A number of people would have liked a bigger Part II to deal with other valuation matters. There have been suggestions, for instance, that dwellings should be assessed on capital values, or, if not that, that capital values should be permitted to be adduced in evidence of rental values. However, we have felt compelled to confine the Bill to matters which can have effect now or in the near future. The two matters I have mentioned could not, even if the Government decided to accept them, be implemented before the next revaluation.
It is one thing to create an exemption during the currency of the valuation list, as in Clause 19 on garages for invalid carriages, which deals with an anomaly to which our attention was recently drawn by my hon. Friend the Member for Wellingborough (Mr. Fry); to ignore the minor structural improvements, as in Clause 20; or even to alter several million assessments in an arithmetically formulated way, as in the case of statutory deductions. It is quite another matter to alter the whole basis on which value assessments are made. But I can assure the House that these matters will be studied in good time before the next revaluation, so that legislation can be introduced in time if necessary.

Mr. Peter Fry: I should like to express on behalf of all invalid-carriage owners their appreciation of the very swift move made by my right hon. and learned Friend. Although it may be of only small financial assistance, it is very much appreciated.

Mr. Rippon: I am grateful to my hon. Friend. I assure him and the House that, in so far as the Bill creates new and, we hope, more flexible machinery,

we shall be grateful now and in Committee to hear of ways in which we can deal with hardship cases of the kind to which my hon. Friend drew attention.
Clause 15 introduces a new flexibility into the law on the rating of empty property. As things stand, a rating authority which resolves to levy rates on empty property has no option but to make properties which have been empty for three months, or newly completed dwellings unoccupied for six months, subject to a 50 per cent. rate. The facts that rating authorities have no choice beyond rating all empty properties or none, that the 50 per cent. rate must apply to all properties, and that, once applied, the powers must ordinarily remain in force for seven years, have all been rightly criticised. They are very restricting, with the result that less than 10 per cent. of the rating authorities now use their powers. We need a more flexible system better adapted to local needs.
The Bill provides that the powers to rate empty property will remain discretionary, but the seven years' minimum period of application will be abolished. Authorities adopting the powers will be able to impose different percentages of the full rate up to 100 per cent. on different classes of empty property, and to vary both the percentage levy and the classes of hereditaments to which the provisions apply in different parts of the rating area. For example, I can envisage circumstances in which a rating authority would wish to deal with a particular class of empty property in one part of its area but not necessarily over the whole area. Where the imposition of the rate would result in hardship, the Bill provides for the rating authority to remit or reduce the rate.
I have already announced, in reply to a Question by my hon. Friend the Member for Essex, South-East, that I propose to amend the scale of statutory deductions from gross value. I shall be laying the necessary draft order before Parliament very soon. The main effect of the proposal, if Parliament approves the draft order, will be to reduce by amounts ranging from £1 to £9 the rateable values of about 10 million dwellings from 1st April 1974. Clause 16 contains provisions which will enable the changes to be carried into the valuation lists with the minimum of procedural fuss, providing


another measure of real assistance to a large number of domestic ratepayers.

Mr. Gordon Oakes: Why has not the Secretary of State already laid the draft order? Why does he include hypothetical matters in the Bill when he had an opportunity to lay such an order before the Bill was published? It would have been preferable if the order had been laid at the time of the last revaluation. Millions of householders would not have had a sharp increase in their rateble value but for the delay by the Government in dealing with the difference between net and gross values.

Mr. Rippon: The sentence in which I referred to Clause 16 gives one of the answers to the hon. Gentleman. We need a much more flexible machinery to bring such provisions into effect. One of the results of the Bill will be that when we see a problem we shall not have to wait so long before giving effect to measures to deal with it. We must be able to move speedily. There was no point in laying the order before the Bill was introduced, in that we are talking about next year's rates, and it certainly will be in operation to affect them.
I am trying to conclude my speech quickly, but we are dealing with a major Bill, covering a wide area.
Part III of the Bill and Schedules 4 and 5 form an entirely self-contained section. Their subject matter, the establishment of an ombudsman system for local government, is important. I hope that the general principles will commend themselves to both sides of the House.
What we are doing, essentially, is to provide for local government a system for the investigation of maladministration akin to that established for central Government in the Parliamentary Commissioner Act 1967, but tailored to the specific needs of local government. It does not represent a new worry or concern about the standards of administration or conduct in local government. The options have been under discussion for some time. Indeed, proposals very similar in their essential purpose were put forward under the last Government. Provision of the system represents a general appreciation of the need to strengthen local democracy by giving a means whereby local issues of concern can be

looked at quickly and dispassionately, and the opportunity for things that have gone wrong to be put right.
Maladministration is a concept much easier to recognise than to define, and Part III does not attempt to provide a specific definition. Instead, it is hoped to have the benefit of all the consideration which has been given to maladministration by the Parliamentary Commissioner in his various reports and by the Select Committee on the Parliamentary Commissioner.
Despite this common concern with maladministration, and despite a number of resemblances between the drafting of Part III and that of the Parliamentary Commissioner Act 1967, there are some substantial differences between the Parliamentary Commissioner Act system and that which we propose in Part III. The system will be entirely separate from, though equal in status to, the Parliamentary Commissioner Act structure. It is intended to be run and paid for by local government.
Instead of an organisation headed by a single commissioner, the Bill proposes a collegiate structure. It provides for separate commissions for England and Wales, consisting of commissioners each of whom will have jurisdiction in a particular part of the country. The commissioners will be appointed by the Crown, but only after consultation with bodies representing local government. The intention is that those appointed will be persons meriting the confidence of local government as a whole.
I stress that the whole purpose is that local government itself, through the representative bodies, should be in effective control of the new system. I also stress the key rôle that local councillors are intended to play in its operation. Just as the Parliamentary Commissioner system is designed to help Members of Parliament in the performance of their jobs, so this scheme is intended to help local councillors to do their job more effectively.
Clause 25 sets out the way in which the scheme will operate. Some hon. Members are concerned that their position should be safeguarded. Whereas in the first instance a complaint is made to a councillor, if the councillor does nothing about it the default powers of subsections (3)


arise, and, if necessary, a Member of Parliament could take the case up on behalf of his constituent. As I said, local complaints will normally reach commissioners through a councillor, who, to some extent, is expected to act as a filter; and the councillor who refers a complaint will receive the report which results from the investigation. Another important element in the system is the emphasis it gives to local publicity, and the effect of public opinion in rectifying any maladministration by local authorities. Thus reports on particular cases by local commissioners will be made available for public inspection, and will no doubt be fully reported in the Press. That is the effective sanction.
Although I have emphasised some differences between the Parliamentary Commissioner Act organisation and that which we propose, obviously the two jurisdictions cannot be completely separated. Quite a number of transactions concern both central and local government at different stages, and there are also the National Health Service Commissioners for England and Wales, so that in Clause 32 the Bill provides the elements of a flexible procedure for dealing with such cases. In addition, under Clause 22 (2) the Parliamentary Commissioner himself is to become a member, by virtue of his office, of both the English and the Welsh Commissions—not for the purpose of handling local complaints, but to give the commissions the benefit of his experience, which will be particularly useful where composite cases are concerned.
There are no doubt many other matters which the House will want to examine closely in Committee—perhaps, in particular, the exclusions from the jurisdiction of the local commissioners under Clause 25(6)—and my right hon. Friend the Minister for Local Government and Development will, if necessary, deal with those points in winding up. I hope there will be general agreement that the basic schemes is sound. I do not think it is necessary for me to dwell at any length on Part IV of the Bill, which deals with a number of miscellaneous and supplementary matters. It will be noted that Clause 34 amends existing legislation so as to remove or relax a number of controls over local authority functions, and empowers the Secretary of State by order to make further amends for this purpose

from time to time. I emphasise that this is a power which I would wish to see fully used.

Mr. Maxwell-Hyslop: My right hon. and learned Friend has used the words "by order". Can he remind us whether that means an affirmative resolution, for which the Government have to provide time, or a negative resolution, which can run out of praying days before it reaches the Floor of the House?

Mr. Rippon: That is a point which it may be necessary to take up in Committee. I should have thought that in the generality of cases the negative procedure was necessary. After all, we are talking about removing a control, and that is usually rather popular. But I shall certainly look into that point, and my right hon. Friend may have more to say in winding up the debate.
I hope that the general review which I have given of the provisions of this major Bill will demonstrate to the House what we are attempting to achieve, and will, in particular, emphasise the Government's determination to give local government a firm and strong financial basis on which to operate. I hope the House will agree that what I have said about the rate rebate scheme shows the consistency of our social policies and our willingness and ability to give a real measure of help where it is most needed.

4.33 p.m.

Mr. Dennis Howell: I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:
This House declines to give a Second Reading to a Bill which provides insufficient financial provision for local authorities to enable them to meet the need for essential services and the increased costs of administration brought about by local government reorganisation, which will inevitably increase the inequitable burden on the domestic ratepayer, and which makes no provision for additional sources of local finance other than the rating system.
We in this country are in the throes of the greatest upheaval in local government which has been experienced for many generations, and this Bill is intended to finance it. Perhaps it will not be out of place to remind ourselves for a moment or two of the importance of local government to the ordinary citizens of this


country. It is a subject of supreme importance which concerns ratepayers at least once a year; it is a subject that ought to exercise the House more than it does; and it is certainly a subject which ought to exercise the media more than it does. I remember that when the right hon. Gentleman the Minister for Local Government and I were having one of our friendly encounters on a previous Bill, one of the parliamentary sketchmen wrote about us that we were a couple of worthies dealing with a rather dull subject, doing it reasonably adequately, and that perhaps that was as much as needed to be said.
I have noticed that this Bill on local government reorganisation, which affects the lives of every person in the country, is not a subject about which the media have grown very excited. The right hon. and learned Gentleman and his right hon. Friend have not had great invitations to discuss the Bill on television and radio, and I certainly have not. But if we were my hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) and the gentleman whom he encounters, discussing what is to be done about private schools—which is important, but which affects only 6 per cent. of the people of this country—we should be appearing every week and at weekends. No doubt private schools are an exciting subject for the media, but they are nothing like so crucial for the people of this country as is this subject.
Perhaps it is well to remind ourselves of what local government is all about. It is about the housing of the people of this country or about providing services for their housing; it is about educating their children; and it is about sustaining people when they are old or sick; and it is about providing for people's leisure—sport, the arts, reading and so on. Local government is the very stuff of life itself, and it is in that sense that we should approach this debate. This Bill is to be judged against those criteria, against public need, against the provision in an efficient and economical manner of those services which I have just mentioned, and on a more expansive basis, and the services provided must be related to the ability of the citizens to pay for them. The question is: does this Bill meet those needs? The answer, I am sorry to say, is that it certainly does not.
I will not say that the Secretary of State has put the clock back today; that would not be right, because there are parts of this Bill which I welcome. I suppose that the clock could be said to be standing still. But information has reached me that, for the first time in history, the clocks of the House of Commons were moving backwards while he was speaking, since the power cut has put back the clocks in this Chamber. So it is possibly symbolic that time stood still while the Secretary of State for the Environment was making his speceh. That is indeed the Opposition's case about local government reform, because this Bill is a retreat from every progressive thought that crossed the minds of all those people who have devoted thousands of hours to the subject of local government reform since the Redcliffe-Maud Commission was established; and, in particular, it is a retreat from the new ideas about raising revenue for local government.
Let there be no doubt at all about the massive nature of the retreat by the Government, because, step by step, we have seen them moving backwards from the position which the Redcliffe-Maud Commission took up, from the position which this House took up and from the position which they themselves took up. First, the commission was established, bringing with it the case for reform. We argued about the substance of the reform, but the desire for reform is, I think, accepted on all sides of the House. Then we had the view of the local authority associations, of the academics of the Press and of the Government themselves. When they looked at this question, the Government produced a Green Paper which discussed a number of challenging ideas for new means of financing local government, for injecting into local government new ways of raising revenue.
It was a step backwards from that position when we got the White Paper and the consultative document. There was a movement away from the challenging thinking which the Government had introduced into our discussions. Now we have this Bill, which sinks the hopes of almost everyone in local government about what is to be done to finance these services in the future. It has been an organised retreat on a massive scale and a victory


only for the timid Ministers and Treasury diehards who have been in charge of the operation.
Those people, including the Secretary of State today, have found it better to deploy the arguments against every possible alternative to the present rating system than to accept the challenge of the need for new and adventurous thinking. I notice that the Royal Commission itself said when reporting on local government reorganisation:
Without … complementary financial reforms the new local government will be cramped and handicapped as a self-governing institution. We therefore urge that the opportunity offered by reorganisation be taken to examine fundamentally the shortcomings of the present local taxation system and remove them.
Those were the brave and hopeful words of Redcliffe-Maud which have now disappeared into oblivion in the course of the speech of the Secretary of State.
The Redcliffe-Maud Commission was even more perceptive. In a comment about new forms of local taxation and about how they might be dealt with it said:
… taxes will not be considered piecemeal, each one being discarded because it has some disadvantages as a local tax.
That is exactly what the Government have done. It is what the pundits in the Treasury have done. As every new idea has come up, the objections to it have been produced without any of the advantages being seized. The objections to the rating system which is to be perpetuated have never been thoroughly understood, explained and compared with the new possibilities. This is a missed opportunity, and it is a sad day for many of us in local government not only for that reason but because it will add to the sense of public disillusionment with local government and with politics in general.
In politics today there is no one subject which has as much public disapproval as the rating system. People do not understand the system. They do not understand how it can operate fairly. They do not believe that it is operating fairly. Indeed, it is not operating fairly. It is geared against the needs of local government. Today the Secretary of State has announced an imaginative extension of the rate rebate system which I welcome and intend to say more about

in a moment. But the right hon. and learned Gentleman has had to tell us that it is now necessary for 3 million ratepayers to be subsidised. That very fact is the biggest condemnation of the rating system that I have ever heard. It would be impossible to produce a bigger argument against the system than to say that it is now almost impossible to operate it unless we subsidise nearly every ratepayer in the country.
Apart from the massive new means test which will be required to operate the system and the increased administrative costs necessary if we are to look into peoples' means, it is a massive condemnation of the system to have to admit that 3 million households will find a subsidy necessary to them. Surely that is the death knell of the system itself. Can there be a bigger argument for burying the system, especially at a time of local government reform? Today we are considering a new Bill on local government finance. Ought not we to seize the opportunity to alter the present situation?

Mr. Sydney Chapman: The hon. Gentleman seems to want to bury the present rating system, and there are hon. Members on both sides of the House who believe that the system is illogical, unfair and out of date. I share the hon. Gentleman's view. But is not the great tragedy that the opportunity was missed not by this Government but by the previous administration? May I remind the hon. Gentleman that the then Prime Minister, in setting up the Redcliffe-Maud Commission in 1966, said specifically in this House that the reform of the financing of local government should be excluded from the terms of reference of that commission? Is not what the hon. Gentleman is saying today a condemnation of his own Government for not grasping this nettle?

Mr. Howell: Strange as it may seem, I was not attempting to make a party political point. I concede that there is considerable force in what the hon. Gentleman says. With a degree of hindsight, I am inclined to agree with him.
The problem with Royal Commissions is to keep them within manageable proportions. We gave the Redcliffe-Maud Commission a tremendous task, and it fulfilled it with some distinction. It might have been better to have added


finance to its terms of reference. However, the biggest criticism that all of us have is that we ought to have reformed the financial structure of local government before dealing with local government itself. There is a good deal of evidence to suggest that that would have been the best way to proceed.
Further, on the Royal Commission point, the Opposition do not believe that the situation can be left where it is. The present rating system is totally unsatisfactory. I understand that the Association of Municipal Corporations has suggested that, if we cannot have reforms in this Bill, we had better get on with it anyway but, simultaneously, we should appoint a Royal Commission to examine all the various alternatives to the present rating system.
The Opposition agree entirely with the AMC. The least that should be done at this stage is to make an examination of all the alternative methods of financing local government and to put that task into the hands of people independent of the Treasury. The appointment of a Royal Commission seems to be the right way to deal with the matter.
The timing of this Bill presents the Opposition with an enormous dilemma. All the alternatives have been rejected. If we were doing our public duty, we would scrutinise the Bill thoroughly. We would table amendments about each one of the alternatives to the rating system in order to see what the Government had to say and in order to examine each one of them in detail. However, if we did that we would create an impossible position for local government. The new forms of local government come into operation on 1st April. They need to know where they are to get their money. They want to know whether Parliament approves of these methods of raising money, and they want to discuss the basis of this Bill with the Secretary of State.
I must say some harsh words about the Government's timing of this Bill. It is a public scandal in the real sense that the Bill has been delayed for so long. It should have come before local government reorganisation. It should have been introduced into the House two years ago. It was promised in the Gracious Speech last year and it should have been put on

the statute book last year. Instead, it is introduced within four or five months of the new forms of local government, on which it depends, getting to work. What on earth are the treasurers of our local authorities to do? This is the moment for them to do their estimating. They must decide what will be the resources element, the needs element and the domestic element. Those are the matters which they want to know about. They must decide and advise their council colleagues how the estimates should be made out and what sort of rate yield they can expect.
The Government have introduced the Bill far too late. The Opposition have a great respect for local government. We recognise the dilemma in which we shall be placed in committee. We shall undergo a self-denial ordinance. We shall not be able to examine in detail—that is not because we do not wish to do so—all the means of alternative financing and the detailed consideration which we would automatically give to the Bill. In Committee, if the Bill has a Second Reading, we shall seek to apply ourselves as constructively as possible to the various clauses.
I now turn to the reason for the Government's retreat from new forms of finance. They were rehearsed by the right hon. and learned Gentleman. I am bound to say that they do not convince anyone with whom I have discussed them. They are to be found in paragraph 2 of the consultation paper on local government finance in England and Wales. It is there said:
The Government believe that the public would not welcome, at the present time of prices and pay restriction, the introduction of additional new taxes locally.
I have not the impression that the Bill is a temporary matter. It is not a temporary measure to deal with the present prices and incomes policy. It is a Bill which we know will be on the statute book for at least 20 or 30 years. Judging by previous local government Bills, it will probably be on the statute book for even longer.
We cannot put off an examination of new forms of local taxation. The situation is not determined by the Government's prices and pay policy. In the


consultative document the Government say:
The Government are currently carrying through nationally a radical reform of both direct and indirect taxation…
None of us has found that any of those reforms have affected local government. The complaint is that the reforms have added to the burden on local authority rather than removing the burden. I am totally unconvinced by the case which the Goverment has put forward.

Mr. Michael Shaw: Do I understand from what the hon. Gentleman has said, in spite of the complaints which he is now voicing, that should his party gain power at the next General Election it will bring no reform into the measure?

Mr. Howell: I have just proposed the establishment of a Royal Commission to consider local government finance. I would hope that the commission would report as quickly as possible. It is my view—I put this forward when the House was considering local government reorganisation and I do not want to rehearse the argument again—and I remain firm to it, that the Government's local government reorganisation strategy will fail. I know that that is a bold view to put forward.
Judging by the time that measures of this complexity are on the statute book and the difficulty of finding parliamentary time, the Government are right to produce a Bill which, although I disagree with much of it, will stand the test of time and will serve local government for many years. Judging by past experience, the Government may be right. I hope that they are not, but it is on that basis that we must proceed. I have made my position clear about the rating system.

Mr. Rippon: The Opposition have had a long time to think quietly, and they may have much longer. It would be helpful to us all if they would give some indication of what new taxes they favour. Everything has been rejected. I hope that we shall hear from the hon. Gentleman what the Labour Party thinks is a viable alternative to the rating system or what he thinks should be a supplement to the rating system.

Mr. Howell: I can assure the right hon. and learned Gentleman that I have a splendid passage in my speech which I have reserved purely for that purpose. I am not leaving the rating system but rehearsing the arguments against it.
The fact is that there is no dynamism in the rating system. The system does not grow as the income of the individual grows. One of the biggest arguments against it is that the Government do not rely on any sort of tax on housing. We could not finance the country on the basis of a housing tax. The taxation system must be based, for purposes of dynamism upon the growth of income. If that is true for central Government, why should not it be true for local government? How can we sustain the argument that we finance central Government by a means of taxation which is geared to growth in personal incomes and company incomes, but take the opposite course when we come to local government?
The tax system has no regard to ability to pay. We are all aware of the tremendous grievance which can be summed up by the example of a widow paying exactly the same amount of rates for her house as the house next door where there are four or five people earning wages and bringing in wage packets every week. That is the dilemma simply stated. It is totally unfair. It is totally out of date and totally unacceptable to the hulk of the people.
I am glad to see that the hon. Member for Ripon (Mr. Austick) is present to represent the Liberal Party. When we consider the Liberal Party's alternative of site rating, that is almost as irrelevant as the existing rating system. Possibly it is more irrelevant. The fact is that site valuation rating has no regard to the individual's or the family's ability to pay. Therefore, that is not of serious consideration as we discuss the problems that face us.
When we consider some of the alternatives, I am glad that I can carry the right hon. and learned Gentleman with me. The alternatives have been discussed in a Green Paper. I want the alternatives to be examined by a Royal Commission. That is the right way to do it. I confess at once that some of my right hon. and hon. Friends might well


have taken the view which the Government have taken about some of the alternatives. However, had there been a progressive approach to the matter it would have been possible to embrace one or two of the alternatives.
I know the arguments against local income tax. It would have to be collected nationally. I concede that it is an illusion to think in terms of local government finance and to suggest that we can never have a situation in which the Government will not have a major say in the amount of money that has to be raised. The Government must have that say. The Government must be in control of the totality of public expenditure at any time. That is important in the deployment of a general economic strategy. However, some means must be found to relate local authority income to ability to pay and to need. That seems extremely important.
The people who argue against local income tax and say that it is impracticable in terms of working it out always argue for bigger Exchequer grants. I can understand the logic of that. Bigger Exchequer grants coming from national taxation are based upon ability to pay because they come from national income tax. Fundamentally they are unhealthy for local government. I agree that if we do not have some form of local income tax or a measure of some kind we shall inevitably be drawn to the alternative of bigger Exchequer grants, with all the dangers for local government inherent in that situation.
There are those who say—I see that there is an amendment on the Order Paper to this effect—that another way of dealing with this is to transfer the teachers' salary bill from the local authorities to the national Exchequer. That has its attractions. If we do not have new forms of government I suppose it is an alternative which most of us would support. It would remove from local authorities a considerable voice in the determination of teachers' salaries. That may be right, but I think the teachers' unions would have something to say about it. My view, based on having been an education Minister for nearly six years, is that it is important for local authorities to have a voice in determining teachers' salaries and to be represented in

the discussions on the Burnham committee.
I was pleased when Sir Edward Boyle, as he then was, decided in his day that the Government should have a say. The reality of the situation is that central and local Government have to come together in determining teachers' salaries. Nevertheless, this is an option open to us, and it is one which the Government have not considered seriously. Certainly the Secretary of State did not mention it during his speech.
There are other alternatives. One which I do not favour is some form of local sales tax. I know that the argument against it is that it would hit the poorest people hardest of all. It is because of that that I am against it. Since the introduction of VAT many of the administrative arguments against a local sales tax have disappeared because the shopkeeper is now a large-scale tax collector on behalf of the Chancellor. There is also the suggestion of a fuel tax, which would be an easy tax to collect. Since transportation and road costs are now so enormous it could be argued with justice that the collection of a local fuel tax is just as much of a necessity as the collection of a national tax.
Another alternative is super-rating, on which I had intended to say something but which I will now leave because of the right hon. Gentleman's announcements of his proposed scheme, which is another way of introducing super-rating. I am happy to welcome the announcements and to say that these measures will certainly be supported by us, apart from the reservations I made earlier about the general situation. Under a super-rating system industry and commerce would have to carry an increasingly larger load. This will have some deficiencies in many rural areas. Perhaps that is one of the reasons why it has been rejected, since it would not produce a just situation throughout the country.
The tourist tax has been mentioned, and it is an interesting possibility. The Secretary of State also mentioned lotteries. I am glad to hear that we might have a Bill on that. I am pleased to see the "Minister for Sport" sitting in his place. I know that he, like me as his predecessor, may well believe that sport has a lot to


gain from the reform of the lottery position. I can see no reason why local authorities should not be empowered to run lottories, maybe to help the youth service, sport, the arts and other services which they would like to expand.
Lotteries have one great advantage. When the Chancellor comes to consider the general economic possibilities of the country as a whole, lotteries are not affected. The decision of a man to spend money on a lottery ticket as distinct from some other form of expenditure does not affect the totality of public expenditure. I was glad to hear what I thought was an encouraging note on this subject in the Secretary of State's speech.
There is one other method of raising money for local government with which I want to deal and about which we shall table an amendment to the Bill. There is no provision in this Bill for the encouragement and expansion in any way of municipal enterprise. I give notice that we will seek to move a general enabling clause which will empower local authorities to involve themselves in municipal enterprises of one sort or another which may be profitable and help the rates.
For example, I would like to see local authorities moving into the real estate business. It is the local ratepayers who are creating massive profits for property developers. The locality is there, services are being developed and provided by the ratepayers, and planning is done on behalf of the community as a whole; yet the vast profits being made are going into private hands. To adopt a famous saying of General Booth, the Salvationist, about the Devil having all the best tunes, why should local authorities have the dirty end of the stick over development? There would be real possibilities of assisting local ratepayers on an extensive scale if local authorities could go into property development and share in the property boom.
We have no confidence in the way in which the Government have rejected out of hand every one of these suggestions. That is why I support the view that we should have a Royal Commission to look at new forms of finance for local Government.
I move to the crucial question facing local government—at the end of the day,

how much will local government have? The Government have rehashed the now traditional formula of needs, the domestic and resources element. The question of how much local government will have is totally unanswered in the Bill, and has to be because of local authority negotiations. I welcome the right hon. and learned Gentleman's announcement to increase the domestic element from a 6p rate to a 10p rate. It is much to be welcomed even though the scale on which it is being done seems to undermine the rating system.
I turn to the prospects before local authorities and their treasurers and particularly ordinary people, having regard to what is now being said about the expansion of local authority services. Let there be no doubt that local authority services in our main urban areas—and in the rural areas, too—are in a state approaching acute crisis. On Thursday we are debating the situation as it affects London. I do not complain of the editorial in the Daily Mirror this morning, which, in welcoming that debate and drawing attention to the crisis in London's public services, asks: what about the other big cities?
It is appropriate that we should spend a moment or two on this. The big cities recently sent a deputation to meet the Prime Minister and discuss their problems. I hope that in replying tonight the Minister for Local Government and Development can give some indication that the problems of the big cities will be dealt with and that when he talks to local authorities about necessary changes in the rate support system he will say in no uncertain manner that areas of declining population and increasing pressure, such as our big cities, will receive a bigger share of resources in future than has been the case in the past. If the Minister is able to make such an announcement after he has discussed the matter with his colleagues and with the local authority associations, I can tell him in advance that the Opposition will welcome it and support him.
One has only to speak to representatives in many of the big cities such as Birmingham, Manchester, Leeds and Liverpool—and I was on the telephone this morning to these cities—to hear the same story about the difficulties they face.


Many are suffering a 20 per cent. shortage in the number of police and ambulance drivers. The subject of ambulance drivers cropped up again and again during my telephone conversations with local authorities this morning. The situation is causing grave concern, and this also applies to the shortage of public health inspectors and transport workers. Problems of urban renewal are weighing very heavily on local authorities, and there is a great shortage of the back-up social services which are so necessary to sustain family life in city areas.
Against this background the outlook for local government is bleak. If the problems are as great as I have been told this morning on my short "Cook's tour" of Britain by telephone, it is a quite inadequate answer to say that the growth of local government must be contained within a limit of a 2 per cent. increase—which is what the Secretary of State said today and what the Chancellor of the Exchequer said only last week.
It must be remembered that interest charges have risen astronomically, oil charges have increased, and there has been a 15 per cent. increase in local authority pensions. All this money has to be found. If all this additional money—money which will not give any additional services to local government—is to be found from a 2 per cent. increase in expenditure, this will mean a massive cut in local government services. If the Secretary of State was right in what he said to my intervention during his speech today, the outlook is indeed bleak.
When we look at local authority expenditure in recent years, we can see how the situation has been moving. In the early 1960s the expenditure was rising by about 6 per cent.; in the early 1970s the rise in the growth of local expenditure dropped to about 4½ per cent. The Chancellor of the Exchequer announced in May this year cuts of £81 million on an already inadequate programme. We are now being told that growth will be restricted to under 2 per cent. This will mean a serious situation for local government.
On top of an already difficult situation, local government has to cope with reorganisation. If the increased expenditure on local government reorganisation

also has to come out of the 2 per cent. increase, this will compound the felony; it will create an almost impossible situation.
As we predicted when local government reorganisation was proposed, there have been massive duplication and substantial increases in local government expenditure. In some cases salaries have risen considerably. In many parts of the country local government reorganisation has been a means of evading phase 2 in the Government's prices and incomes policy. New jobs have been created at salaries far in excess of what would have been allowed in the Government's prices and incomes policy had reorganisation not taken place. This massive duplication of administration will have to be paid for by somebody, and undoubtedly that burden will fall upon ratepayers.
I wish to mention one or two important matters which we shall seek to raise in Committee. Clause 2(4) has been described to me by the Association of Municipal Corporations as obnoxious. That is perhaps a mild word to apply to a proposal which will mean that a metropolitan district will not qualify for a resources grant if the county concerned is not eligible. This is surely unfair, and I hope the Government will think again. There may be a situation in which a metropolitan county will not need the resources element, but within that county there may be some impoverished districts. Therefore, it seems to us wrong to exclude those districts.
I am told that on 5th November the Secretary of State, during discussions outside the House, gave an undertaking that he would make no such order this year. I hope that is true. Nevertheless, the power should not be in the Bill this year or in any other year. If the power remains in the Bill, I am told that no London authority would receive a resources grant, and this is of great concern to London Members of Parliament.
The second matter which we shall seek to raise in Committee arises out of Clause 20. The Government propose no change in rateable value between assessments where certain improvements have been carried out, particularly central heating. At first sight I was not quite sure what this meant. It seemed to us that what the Government were saying was that if somebody puts in central heating after


1st April 1974 he will for ever more be exempt from any question of that being added to the cost of the future rateable value.

The Minister for Local Government and Development (Mr. Graham Page): Only until the next revaluation.

Mr. Howell: That was my interpretation, but it was not the interpretation adopted by my hon. Friends. I took another look at the situation and concluded that my hon. Friends were probably right on the wording as it now stands. Although I understand why the Government are taking this view, it seems inequitable to say to a householder "Put in central heating and we shall not increase your rateable value for a few years". Surely that is unfair to those thousands of householders whose houses already have central heating. When a person decides to spend money on central heating—a process that does not add to the area of the house as a whole—rather than spending the family income on a motor car, or going to the dogs, or going on holiday abroad—I do not see why he should be additionally taxed.
It is time that central heating was removed entirely from the whole question of rateable value. In Committee we shall seek to move an amendment to put this right, so that the provision of central heating in households will not prove to be a financial burden on householders. I am not putting this forward merely because I know it will be popular, although I am prepared to concede that we need all the popularity we can get. We are putting forward this idea because we happen to believe that it is the right thing to do. Therefore, I hope that Conservative Members will join us when we deal with this matter in Committee, and that we shall then have an all-party approach.

Mr. Arthur Jones: Does the hon. Gentleman not agree that this may play havoc with the mechanics of rating valuation?

Mr. Howell: I am aware of the administrative difficulties. My treasurer mentioned these difficulties when I discussed the matter with him over the weekend, but I am sure that this is the right thing to do.
There are two further matters of concern in which we see merit. I refer to

agricultural derating and rating of Crown properties. I do not think it is possible any longer to sustain the argument that, with food prices at such a high level and with support for the agricultural industry running at its present rate, agricultural derating should be continued. As for Crown property, I believe that it should be rated equally with other property.
I understand that we shall hear something from the Government a little later today about regional water authorities, rate rebates and the recovery of unpaid bills. This is a matter which is causing considerable concern, and I hope that more will be said on this subject when the Minister replies to the debate.
I understand that some local authorities have as many as 10,000 unpaid bills a year. Therefore, for this House to legislate that there must be two court actions in respect of each seems monstrous. I hope that we can clear up that situation. To have to go to the magistrates' court to deal with a default in payment of the general rate and then to the county court in respect of a default in the water rate seems untenable. I am sure that the Minister will want to make that position clear.
Clause 8 deals with a new rate rebate scheme, of which the Government are to pay only 90 per cent. We shall seek to ensure that the Government meet the whole of the cost of the new scheme. They should do so. If there are needy people who require these rate rebates they should be the responsibility of the community as a whole. Therefore, the whole of the rate rebate should be met by the Government.
In view of the time, I will not speak at great length about the ombudsman proposal. I hope that my hon. Friend the Member for Widnes (Mr. Oakes), who is to conclude for the Opposition, will be able to devote more time to this subject. I give the proposal a general welcome on behalf of the Opposition. The Government are right to introduce a local ombudsman, although in many cases local councillors provide this service in a way that Members of Parliament cannot in central Government. They have a closer relationship with officialdom in their localities than is possible for most Members of Parliament to have with civil servants here. That should be taken into account in any scheme that we produce.


However, I think that an amendment is necessary to enable Members of Parliament to go to the local ombudsman about any particular case. We shall seek to put down an amendment to that effect.
Members of Parliament see thousands of constituents during the lifetime of a Parliament. People seem to think that there is some magic about a Member of Parliament. They look to their Member of Parliament as the custodian of their rights. Whilst it is right to give local government the opportunity to put matters right, nevertheless, if we are not satisfied, we should have direct access to the local ombudsman and we shall seek to achieve that situation.
The Bill does far too little far too late. It perpetuates all the worst features of the rating system. Inevitably it will mean large increases in the rate burden of domestic consumers, accompanied by a serious reduction in the standard of local authority services. A glorious opportunity for reform has been missed and it may be many years before such a chance occurs again.
For these reasons, we shall certainly register our disappointment and concern in the Lobbies tonight.

5.24 p.m.

Mr. Julian Ridsdale: The hon. Member for Birmingham, Small Heath (Mr. Denis Howell) has called for the appointment of a Royal Commission. I should remind him that over 10 years ago I called for such a Royal Commission. Alas, we are still in the position of having to call for a Royal Commission because successive Governments have failed to reform local government finance. The hon. Gentleman said that we should have reformed the financing of local government before reorganising local government. I agree with him. I pressed the Labour Government to do it just as I have pressed my own Government. We are paying a grave penalty for not having done it.
The rating system with all its complications—the Bill does not help—is becoming a Chinese puzzle and almost as difficult to understand as a mandarin's scroll. At a time when the Chancellor of the Exchequer is instituting a tax credit scheme to relieve many from means tested benefits, the Secretary of State

for the Environment, supported by the Chief Secretary to the Treasury, brings forward this Bill, which will make a whole lot of new inflation-hit ratepayers apply for relief—the very people who, in more normal economic circumstances, would never have dreamt that they would have to apply for rate relief. I am glad that the means are there, but with proper forethought the need for such relief should not have arisen. This is one of my main criticisms of the Bill, although I appreciate that the Government are doing their best to help some of the people who will be seriously hit by the increase in rates.
The Government subsidise local government and then subsidise the ratepayer because he cannot afford to meet the demands of even a subsidised local authority. It is almost a Box and Cox position at the present time.
The present proposals are unimaginative and bureaucratic and can in no way be called the reform of local government finance for which I and many of my hon. Friends have been pressing. I wish that the Labour Party, when in power, had been bolder in this respect. Certainly, many of my hon. Friends and myself have been pressing successive Governments over the last 10 years to reform the financing of local government. What an opportunity the Government had to get away from subsidies which in no way ensure that we get value for money. Alas, this opportunity has been thrown away.
The proposals in the Bill make only minor adjustments to the costly financial structure of local government whilst harshly increasing some burdens that local authorities in the Home Counties, the Essex County Council in particular, which is my local interest, will have to face. Essex Members, led by my hon. Friend the Member for Essex, South-East (Sir Bernard Braine) have made strong representations about the proposed loss of grant. I hope that we shall get an answer on this point from my right hon. Friend the Minister for Local Government and Development, who I understand is to conclude the debate for the Government, as it affects not only Essex but many of the Home Counties.
We are concerned not only about the extra burden falling on the rates, but the


other charges which will be affected, such as the water rate, and others, which will place extra burdens on the rural areas because of the reorganisation of local government itself. In all these areas the ratepayers face increased charges, apart from inflation.
In the inflationary situation that we are now experiencing I am sure that as so many of the extra burdens are national, not local, they should be borne by the taxpayer and not the ratepayer. Tax revenues, especially in inflationary times, are far more buoyant than rates.
As it is not the Government's intention to do this, will the Minister tell us whether the water rate will be rate rebatable? Certainly with the alterations which are being made in the rate support grant, particularly regarding sewerage and water resources, a strong argument can be made for this. In particular, the water rate falls heavily on those who I pressed in this House long ago should be relieved of the rate burden altogether. If the Government wish to give relief they should let it go to those who need it most, and those who need it most will be those who are paying the water rate.
In speech after speech on rates in this Parliament and on the Green Paper I have urged that national charges, such as education, should be paid for by the taxpayer rather than the ratepayer. The reasoned amendment which I tabled makes a plea that I have been making for a very long time. It is in no way met by the proposal in the Bill to pay for the mandatory awards and grants to students. I know that my right hon. and learned Friend gave the overall picture of about £300 million being taken off the rates, but he included items other than students' grants in that sum. Will he say what is the figure for students' grants? It is my feeling that it is a much smaller proportion than the overall figure that he gave.
When I first came to the House in 1954, education in England and Wales in that year was costing about £400 million. In 1967, when for the second time in five years I drew the attention of the House to this problem of local government finance, the figure was £1,500 million. In March 1972, when I again spoke in the House about this problem, the cost had almost doubled since 1967, in a short period of five years. Now,

because of the high rate of inflation, the cost is more than £3,000 million, and is likely to get worse.
My right hon. Friend the Secretary of State for Education and Science has promised that by 1980 there will be 514,000 teachers. I welcome that, but I am concerned that 70 per cent. of total education spending is the cost of teachers' salaries and pensions. Is it right that the money to pay for this vast army of 514,000 teachers has to be found from the ratepayers, even though there is this huge amount of subsidisation promised in the Bill?
The number of teachers has increased by 100,000 during the last 10 years. The total of 514,000 is more than that of the Armed Forces put together. Would we ever think of putting the whole of the defence bill on the rates? That bill is lower than the education bill, yet we put the latter on the rates and make no attempt to reform the system of payment.
That is why I have been appealing to the Government—as late as February and March of this year, and in Motion No. 274 in the last Session—to stop thinking of subsidisation through the rate support grant. This kind of policy is causing extravagence, we are not getting value for money in education, and it is putting an extremely unfair burden on ratepayers. Let us face reality and ensure that such charges are paid directly by the taxpayer. A limit would then have to be on local rates, and it would be in keeping with the prices and incomes policy. Increases in rates are like increases in prices, and they hit just as hard. Why not say that any excess increases in rates must be justified to the Price Commission? That would be one way of tackling this serious problem.
It was more than 10 years ago that I drew the attention of the House to the increase in local government expenditure. I am glad to say that that led to the setting up of the Allen Committee and the start of the rate rebate scheme. Now reorganisation are to be met by in have to face because of local government reorganisation are to be met by in extension of that scheme. This is not reform of local government finance. This is improvisation. When will the Government face the reality of taking the educational burden, and that of other national charges, off the rates?
It is far fairer that a larger part of such charges should be paid by those who can afford them, rather than by those who cannot. I warned the Government during a debate in the House in March that if something was not done along those lines I should be forced to vote against them. I am gravely disappointed that the amendment in my name has not been called. I cannot agree with some of the views expressed by the Opposition, out, as a protest, because I feel strongly that the Government have refuted all the arguments that I have been putting forward and have brought in this piecemeal legislation, even though I admit that many parts of this measure are good, I shall have to vote against the Bill.

5.34 p.m.

Mr. R. B. Cant: I share the belief of my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) that local government is extremely important, not only from the point of view of the quality of life of the people concerned, but also in a strictly qualitative sense. But few people share that view, and the few hon. Members present is an indication that even Parliament pays little respect to what, after all, pre-empts about 18·7 per cent. of the gross national product.
I remember a television producer in the Midlands saying that he would like me to take my turn in the parade of Midland Members of Parliament "on the box". I agreed, and he asked me what I wanted to talk about. When I said "Local government", he replied "Oh dear. Nobody is interested in that". But then a light came into his eyes, and he said "Corruption, yes. We will discuss that. Can you bring in Mr. Poulson?" That, to some extent, is the estimate that we have of local government.
I feel that in a sense I may be slightly unpopular with my Opposition colleagues this afternoon, because I know that one would have liked to see a Bill which included a number of the taxes which my hon. Friend indicated in his new source of local revenue, and I think that that time will come, for all the reasons that he gave.
Rates are a regressive tax. People do not like them. Most people have to pay

this tax in lump sums. They do not always see clearly that they are getting services for which they pay, but they often see other people getting services for which they are paying—children's education, and so on.
The Goverment having dawdled over producing the Bill, what we have to face is that it would have been totally impracticable to have introduced any major reform of local taxation now. I sometimes think that rates are rather like examinations. Everybody is against them, but nobody can find an adequate substitute.
We are dealing with a tax which raises not £100 million but £2,400 million. That may be more than the defence estimates. If it is, it is pleasing to know that we spend more upon education than on defence, and I am sure that it fulfils Plato's definition of a civilised country, but what we have to face is that no major reforms were "on".
There is one other aspect of this problem which impresses me. It may be that I am getting rather mellow. This year I am to receive my gold medallion for 20 year's service on the local authority. I may, therefore, be wedded to the system of rates in a way that is disgusting to my hon. Friend, but it stems from the fact that one has lived with it for so long.
The way I look at it is that we could do with a little less change in many departments of our life. Too many people who gain office—this applies to both sides of the House—think that they must go down in history as having introduced a major reform and turned the place upside down. I confess that I should have been happy to turn local government upside down on the Maud basis, because I think that the two-tier system which has been introduced into local government—as a responsible local elder statesman I must choose my words carefully—is leading to a measure of disturbance which is affecting elected representatives, the staff and the people who put us there. That is one reason.
We have also put forward the argument that this system is necessary because it will save money and make for greater efficiency. My hon. Friend the Member for Small Heath has suggested that some people are having rather serious misgivings about it. This is affecting the rates.


During the last few months I have taken part in discussions at district and country level about the whole question of recruitment of staff. One might have hoped that one would have kept all of the old officials in local government and that new people from outside, in this local government reform, would have brought in a breath of fresh air. But too often this has been a sort of incestuous game of musical chairs. Too often when the music has stopped one official, perhaps, has fallen out—with an excellent retirement pension and generous redundancy pay—but another chair has been added. When one adds up the number of staff at local government level required to run Staffordshire in April 1973 and sees the substantial increase in the numbers that will be required in April 1974, one realises that this increase may eventually result in a 30 per cent. increase in the rates. However, I do not want to dwell on that point.

Mr. Keith Stainton: I entirely agree with the hon. Gentleman's forecasts of large increases in staff, and so on, in the short term, but could not this be a temporary phenomenon? Should not one be more inclined to take a five-year view of things as they will be when the reorganisation has settled down?

Mr. Cant: What I am afraid of is that everything may settle down on a higher plateau. Perhaps the memory of local ratepayers is short. Let us hope so, for the future prospects of elected representatives.
My third reason for supporting the Bill is one that was conceded by my hon. Friend the Member for Small Heath. Every city treasurer who has written to Members of Parliament has said, perhaps, "This is a terrible Bill but do not, for Heaven's sake, delay it unduly because the Government have us over a fiscal barrel, in the sense that if we do not get the Bill through fairly quickly, our local authorities will be somewhat deficient in funds". I am sorry that I cannot support my hon. Friend the Member for Small Heath today. The future will be different. As the Government have left it for so long, it would not be a practical proposition to try to introduce major reforms in local taxation now.
I want now to talk about rates and grants and about local authority borrow-

ing in the Euro-dollar market. I do not want to enter into a general discussion about rates. Obviously one must accept what the Government have done. I cannot regard is at a step backwards. Although it introduces, perhaps, further administrative complexities, it is a step forward. The rate rebate scheme does not go far enough. The Secretary of State said, "You will be asking us to do more". Of course we say, "Do more". The scheme will not eliminate the regressive element of taxation until a person reaches at least about average earnings. I agree with my hon. Friend about the statutory deductions. How many hon. Members, on both sides of the House, during our previous debates on revaluation, asked the Government to do precisely what they are now doing? It would have been perfectly simple and it would have taken some, at any rate, of the rate burden off taxpayers. The Bill fulfils all that I want regarding the rating of empty property.
I have come to the conclusion that, in a sense, all these items will play a prominent part in the Conservative Party's election manifesto. They will undoubedly be acceptable. I am not cynical enough to suggest that they have been designed with that in mind. That would be quite improper, but I suspect that it may be somewhere near the truth.
I should like to encourage the Government to think a little about change in rates in the whole area of rating valuation. Anyone who has served for a long time in local government is always "anti-valuers", whether local valuers, district valuers, or whatever. But many of the problems that are associated with rating today arise because valuers have not done their job properly. Their job is to try to assess a rateable value based upon a hypothetical rental value paid by a hypothetical tenant, and so on, in a hypothetical free market. But revaluations going back only to 1963 have shown clearly that valuers take a very narrow view of their job. I should like the Government to broaden that a little. Valuers are concerned mainly with reacting to criticism. I shall not go into matters in detail and time. But the 1973 revaluations were adjusted significantly in response to criticism of the 1963 valuation such as under-valuation of small terraced houses and over-valuation of semi-luxury flats in London, and so on.
The main cause of error is simple. They worked on a very simple system of multipliers, whose function is to see to it that inflation and the fall in the value of the pound, and so on, has been taken into account. If the Government are to make sense of valuation and to make it realistic, they must draw valuers' attention to the fact that they must pay more attention to the rise of capital values. Here we are dealing with something which has become the biggest hedge against inflation, apart from the possession of a valuable picture. It is a hedge against inflation which is also an untaxed capital gain. Any attempt to work out a system of rateable values which does not take capital values into account is wholly unrealistic in this period of time. This would help my hon. Friend the Member for Small Heath.
If more attention were paid to this key factor rates would have a quality which it is alleged, nowadays, that they do not possess—they are criticised for not possessing it—namely, buoyancy. If my hon. Friend were an economist—he is too human and too nice to be one—he would say that rates lacked local fiscal drag. This would give it to them. The Government should talk to the valuers.
Regarding grants, as my hon. Friend has said, it all depends on how much. We do not know how much the total rate support grant will be. Discussions have taken place with the local authority associations. They know all about it. The House of Commons, as usual, knows nothing about it. Hon. Members are so used to this circumstance that they readily accept.

Mr. Graham Page: I am sure that the local authorities do not know the amount of the grant nor the percentage of grant on the relevant expenditure. They will not know it for some time until we have discussed it further.

Mr. Denis Howell: As I understand it the local authorities were not consulted about the proposals announced today by the Secretary of State in respect of the new domestic element being raised from 6p to lop. Since the Government pulled that out of the hat and showed that consultations with the local authority associations were meaningless, I hope they will be more meaningful about the new financial arrangements.

Mr. Cant: My statement was made merely to draw the Minister on the subject. We are in a peculiar situation, because I gather that we are to have a White Paper after the Bill or after the Act, and that is a little odd.
Quite apart from the total amount of the rate support grant, I am concerned whether the Government can devise formulae which will be subtle enough to do the new job which they are hoping to do, and have promised to do. It is wholly admirable that the bias in the rate support grant will be directed towards the cities. I say that not only because I come from a city. I believe the bias is long overdue. It is obvious that any analysis of the resources element has shown that it is defective, and one of the ways in which it is defective is that there is no way of getting a drawback from the richer authorities. I know that that is a negative way of looking at it, but it is a most important aspect. So, as the two gentlemen from Cambridge who wrote the pamphlet mentioned, local authorities with below average rateable values per head find themselves in a kind of poverty trap in that any increase in rateable value through industrial and commercial development automatically reduces pound for pound their entitlement for grant under the resources formula. Richer authorities, however, with above average rateable values, find that the provision does not operate against them.
This, therefore, will be a problem. If an adequate and effective formula can be devised by all those bright young men working away with computers in the appropriate Ministry we should welcome it. Equally, the Minister has promised that the needs element, which is in theory supposed to offset in full any deviation in demographic structure, gets away from the distortions that have arisen, because it discriminates against areas with a large number of children and in favour of areas with a high proportion of old people. That should be easier to bring about than the resources element.
The domestic element is a bit baffling. Although it appears to be something of a gesture in the interests of greater equality, it is, ironically, terribly regressive, for obvious reasons. Those unfortunate authorities which have to put on high poundages because it is a fixed amount create a situation in which the


benefit to someone in a small terraced house is much less than that to someone in a higher quality home.
The problems facing local government and as outlined by my hon. Friend the Member for Small Heath are enormous. We are reaching the point now where, thank Heaven, we are rebuilding our society from the bottom. We are not so much concerned in local government terms with prestige projects. We are instead beginning to look at the basic needs—the grass roots of our local democratic community. To put this right for all the large numbers involved, to build up the bankrupt infrastructure in many cases will be enormously expensive. The Government should not listen to the clarion calls of the people who write that Tory Bible, the Economist, and put a ceiling on rates. The Government should learn the lesson from what they have been doing with prices in the nationalised industries. If it is proper to subsidise a nationalised industry to the tune of an extra £147 million merely to enable it to keep prices within the bounds of a price code they must adopt the same attitude towards local authorities. Local authorities are responsible for jobs that have to be done if the health and welfare of the community are to be sustained. I hope that the Government will make this rate support grant a large and generous one, particularly for the cities.
I had intended to say a few words about local authority borrowing but I will cut that to practically nothing. This is a matter the Government should consider. Any survey of local authority borrowing in the Euro-currency market would indicate that local authorities are borrowing on the very worst possible terms at high interest rates and that a great deal needs to be done either to put all this under the Public Works Loan Board or to arrange for open public tender.

5.59 p.m.

Mr. Charles Morrison: I thought that the hon. Member for Stoke-on-Trent, Central (Mr. Cant) was about to take us off on an interesting new tack and I rather regret that he did not pursue that line a little further. He has spoken with the voice of experience and a good deal of realism. When he began I thought his remarks would be a little too

conservative. Of course, I agree with him that we could do with a little less change, but as he continued in his remarks I realised that he was a supporter of evolution and to that extent I can ally myself to his general approach. I think his approach was much in contrast to that of the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) who I regret is not present at the moment but who seemed to be indulging in a number of imaginary revolutions.
He accused the Government of a massive retreat in respect of certain proposals on local government finance and on the recommendations of the Redcliffe-Maud report. I do not see how the Government can be accused of retreating from positions they never took up. They may not necessarily have been right not to have followed some of the recommendations in some recent reports, but they clearly cannot be accused of being wrong.
However, I thought that the hon. Member for Small Heath was right to emphasise the importance of local government, as did my right hon. and learned Friend, although I must admit that I thought my right hon. and learned Friend was not entirely successful in trying to make out that the Bill, however important it may be, was more exciting that it is. I do not consider that it can give rise to any great feeling of party evangelism. Nor is there much in it to put one into a state of political ecstasy. To be fair to it, the Bill does, amongst other things, make some sensible changes about specific grants, and it makes helpful changes in valuation and exemptions. The Bill introduces a new concept of a local government ombudsman and it is basically necessary in the light of local government reorganisation.
The Bill is a disappointment to sonic, including the hon. Member for Small Health, because it does not provide a totally new basis for local government finance.
I am sure that all my hon. Friends agree with me that it ill behoves the hon. Gentleman to criticise the system when the last Labour Government produced no alternative and when he, at the end of the day, could call only for yet another Royal Commission. The Government cannot be criticised for not introducing a radical change in the system of finance. Way back


before 1964 the Labour Party was implying that it would introduce radical reform of local government finance. But time passed, and nothing happened.
If the present Government had adopted the recommendations of the Redcliffe-Maud Report, including the proposal for regional authorities—I would not have objected if they had adopted some of them—it is possible that an alternative basis for local government finance could have been designed. But the new system is a much watered-down version of Maud and there are no regional authorities. Although regional authorities are all very well in theory, they will not work out in practice in this country; because a region might make sense socially it does not necessarily make sense geographically or economically, and vice versa.
Broadly, the new local authority areas are not large enough, nor big in population, to provide a basis for an alternative form of local taxation, with a reasonably certain yield and which is reasonably cheap to administer.
The hon. Member for Small Heath suggested that there might be a system of local income tax. My view immediately is that a system of local income tax relative to its yield would be enormously expensive to administer. However, I hope that every farmer will take note of the reiteration by the Labour Party Front Bench of the proposal that agricultural buildings should be re-rated.
I believe, in spite of those remarks, that the Government can be criticised for not being a little more adventurous in the Bill. I should have liked the Government to put into the measure some discretionary powers for local authorities which they could have applied had they felt so inclined.
There are three alternatives which could have provided local authorities with means of raising money. First, there are lotteries. I was pleased to hear my right hon. Friend say that the Government are to give more thought to them. I am opposed to a national lottery. Originally I favoured such a suggestion, but I went into the question in considerable detail after the proposal for a national lottery was made by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) when he was Chancellor of the

Exchequer. Having considered the matter in great detail, I came down strongly against the idea of a national lottery.
I am even against a county lottery. However, I should like to see the new districts have the power to hold lotteries. The relationship in a district between a lottery and its results could easily be seen. Only a limited size of project would be involved. Such a lottery at district level would be of particular relevance to recreational provision.
Secondly, if lotteries are to be limited to districts, more consideration should be given in the counties to the possibility of a discretionary hotel tax. Such a tax is quite common abroad; one runs into it in almost every country one visits. It would produce particular benefit for local areas, both from the growth of tourism and from the increase in the number of business visitors.
Thirdly—returning to the point made by the hon. Member for Small Heath—it is a pity that the opportunity provided by the Bill was not used to provide the power to allow a local fuel or petrol tax Generally, I favour a lower licence duty and more taxation on petrol, so that car owners can pay more for road use and less for garage use.
Those three ideas are by no means a comprehensive list. Undoubtedly, there are many other possibilities. I hope that the Government, having put the Bill through the House, will not consider that they have reached the end of the trail but will continue to consider possible alternatives for raising local government finance, albeit in conjunction with the rating, system.
Turning to Clause 8, I am pleased to see that there is to be a specific grant for monetary awards and grants to students. This provision will remove a major bone of contention amongst local education authorities. However, why should the specific grant be at only 90 per cent.? I echo the words of the hon. Member for Small Heath. Why should it not be at 100 per cent.? Local authorities have no discretion about mandatory grants, unlike in other spheres. Therefore, why retain a façade which implies discretion which they do not have?

Mr. George Cunningham: Does not exactly the same point apply to other


expenditure falling as to about 90 per cent. on local authorities such as the cost of courts, probation services, and so on?

Mr. Morrison: I will come to that point in a few moments. I was about to say the same, but with greater emphasis, about the 90 per cent. in respect of the rent rebate scheme. There it is even more important that the grant should be 100 per cent., bearing in mind also not only that it is a statutory provision but that there is also provision within the Bill to allow a local rebate scheme to provide greater benefit than the statutory scheme. I think that as a general principle the Government should provide 100 per cent. where a local authority has no discretion but that where a local authority has discretion the total should be consolidated within the rate support grant.

Mr. David Stoddart: Following the hon. Gentleman's last remark, may I ask whether he agrees that this should apply also in the case of the Housing Finance Act and that, as the local authority has no discretion in the rates it charges, it should be granted 100 per cent. on that rebate?

Mr. Morrison: I am talking about the Local Government Bill and I do not want to be sidetracked into housing finance.
Clause 15, so far as it goes, is very good. It is undoubtedly an improvement on the old law, which allowed for 50 per cent. rating on unoccupied buildings. I should like to see one addition. I should like to see a discretionary provision for a really swingeing increase in rates, increasing preferably by geometrical progression, according to the time of non-occupation, of unoccupied office blocks. I make that suggestion on the basis that they should be rated in such a way after a reasonably generous time lag—say, about 12 months for new office blocks and possibly less for old ones. It is monstrous that office blocks have been constructed and in some cases, albeit in a relatively small number of cases, have remained unoccupied for a very long time.
The provisions of Clause 19 are humane and sensible and the Government are to be commended on the provision which exempts from rates certain facilities for disabled persons. Likewise, I think that Clause 20 is sensible. I was

very sorry to hear the hon. Member for Small Heath carping about this, because few things have created more irration amongst householders than to find that after they have carried out some relatively minor improvements such as central heating they are immediately landed with an interim rate increase. I am very glad that this is to be rectified.
I welcome the provision for a local government ombudsman, but I hope that the local commissioners will be used sparingly, almost as a court of appeal of last resort rather than one of first resort. In the ordinary course of events the average citizen's means of redress in connection with a local government grievance should be his locally elected representative who should be perfectly capable of dealing with the vast majority of problems. If the ombudsmen are over-used, so will their bureaucracy grow and before long we shall have to have another sort of ombudsman to look into the ombudsmen.
In Part IV, I welcome Clause 34 as I would welcome any clause which removed or relaxed control over local authorities from Whitehall.
Finally, I return to the application of the rate support grant, because it has caused very great concern in rural areas, particularly, but not only, in the South-East. I believe that it has also caused a good deal of concern in certain parts of Wales. My right hon. and learned Friend said that he had warned local authorities to limit the growth in their expenditure. That is a perfectly reasonable and acceptable warning as to the future. What my right hon. and learned Friend could not do—and neither could the Government—was to encourage local authorities to increase and improve their services and then change the rate support grant practice so that some areas suffer loss of enormous and assumed allocation of grant.
It seemed that there were, in consequence, two options open to the Government. First, there was the possibility of accepting the working party proposals—which, in effect, allocate more to the conurbations and less to the rural areas—or, secondly, of retaining the old allocation arrangements, giving special aid to the conurbations. It seemed that the Government had opted for the former, and that would undoubtedly have caused


a vast increase in rates, or a cut in services, or both. What my right hon. and learned Friend said about the domestic element must be studied.
In the meanwhile the Bill should be welcomed, and provided it redresses, or virtually redresses, the position it will be entirely acceptable to local authorities. Had it not been for what my right hon. and learned Friend said today, the financial outlook for local authorities, and the services they could provide, would have been bleak.
Subject to minor alterations the Bill should be supported. It will be one more means to help ensure that the new system of local government will work on oiled wheels.

6.16 p.m.

Mr. Elystan Morgan: Unlike the hon. Member for Devizes (Mr. Charles Morrison), I do not consider that the Bill can be cured by minor alterations. My interest in the Bill centres on Part I, which deals with changes in the rate support grant system.
When the Bill is viewed from the perspective of a few years it will be regarded as an ill-conceived measure which failed in its basic and central purpose. It will be adjudged a failure, first because its proposals were not dealt with at the same time as the whole question of local government reorganisation was considered. It is wholly wrong that the considerations of local government boundaries and functions should be divided and divorced from the third factor, local government finance. They form an indivisible trinity, and it was unwise for the Government to deal with them in a piecemeal fashion. I go further and say that these three factors should have been dealt with in the whole context of whatever study the Government are giving to the Kilbrandon Commission's recommendations in so far as they impinge on local government reform. In any event, should there have been this indecent haste to deal with local government reform before the Kilbrandon Commission reported?
The measure has failed to go to the root of the problem of rates, and I endorse what other hon. Members from both sides have said about rates being a regressive tax. There is an ever-widening

gap between the annual growth of the rate base and the rise in local government expenditure. In the past five years the rate base has grown on average at 2½ per cent. per annum, added to which there has been a growth in poundage on average of 1 per cent. per annum.
There is a wide gap between the 3½ per cent. combined figure and the average rise in local government expenditure. Any hon. Member who maintains that the average growth in local government expenditure in the next five years could be contained to within 4 per cent. a year would be regarded almost as an irresponsible optimist.
There is a great temptation to wander down some of the fascinating philosophical byways to which we have been referred in relation to alternative rates as a substantial source of local government revenue, but as I wish to deal with another aspect I must abjure that temptation. I am sorry that my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) is not present. I disagree with him when he pleads that consideration be given to rerating agricultural land. That would be a certain formula for a sharper increase in the price of food than we have already seen. There is, however, one exceptional situation in which I should like to see agricultural land rerated. This is where there is an element of pure speculation in the purchase of farming land, where the genuine farmer is driven out by concerns that do not have agriculture at heart. It may well be one of the weapons that future Governments must have in their armoury to deal with this difficult problem.

Mr. Charles Morrison: I have some sympathy with the point made by the hon. Gentleman, but has he thought about how it is possible to distinguish between the genuine farmer and the speculative farmer? Nowadays many buyers of land are admittedly coming in from outside and paying high prices but are farming the land themselves.

Mr. Morgan: But many of them do not farm the land themselves. I could devise numerous formulae to distinguish, but this is not the time to do it. I hope that the opportunity will present itself before very long. The Government have gone for two years and four months


since the last debate on agriculture. That is a matter that the hon. Gentleman will no doubt take up with his Front Bench.
Thirdly, the Bill deserves strong criticism on account of its timing. Despite the Secretary of State's glowing optimism, it will probably not have a swift and easy passage through Committee. It may well not return to this Chamber until next year.
Treasurers of local authorities are used to receiving the details of the central Government grants they are to receive in the following financial year not later than the end of December or the beginning of January. Clearly, that will not be possible this year. Therefore, the basis on which massive decisions are made on the expenditure of more than £3,300 million will be enshrouded in uncertainty for a long time.
In an editorial, the journal Local Government Finance said in August:
It is about time the Department of the Environment and the Treasury came clean and informed all concerned as early as possible the extent of any Government assistance, either long term or transitional, to enable existing and new authorities to plan more efficiently rather than be suddenly informed at the last moment of what is to be done. We are rapidly approaching the situation when the implementation will be expected on the day before the decision or direction is given.
In a way the Government have excelled that since, although we have not been told that the authorities must come to those decisions before the Bill has been passed, the White Paper, of which we had the first mention this afternoon, will not be published for a considerable time, and it may well be, therefore, that they will have to come to decisions in advance of the White Paper.
Lastly, and most substantially, the Bill will fail because it contains blatent discrimination against rural areas, many of which, even under the present system, suffer an acute deprivation. The amalgamation of local authorities next year can do nothing to reduce the sum total of an area's needs, irrespective of the number of existing local authorities amalgamated to form the new area. Nevertheless the sparsity factor, which has been very important in calculating the level of gram to be received from central Government, will be materially affected by that amalgamation. The totality of need will

remain the same but the basis of calculation for the purposes of subsidisation will automatically be changed by the very fact of amalgamation.
Added to that, there is the factor of a change in the specific formulae for grant as compared with the current system. We can judge only from the best evidence that has been gleaned by local government treasurers throughout the country, which has been the basis of strong recommendations to the Department over the past few months. Let me give a few examples. The Dyfed County Council in South-West Wales is to be formed from the amalgamation of the present counties of Cardigan, Carmarthen and Pembroke. I am informed by the most reliable sources that, with regard to the sparsity factor, there will be a net loss for the new county council of no less than £1·6 million per year. The changes in formulae as compared with the criteria now extant under the Local Government Act 1966, mean a further loss of £1·2 million. If Ministers can authoritatively show those figures to be wrong and exaggerated, I shall be very happy and there will be general jubilation in the county halls concerned. But those are the calculations from the information which has been given by the Government so far.
Six of the eight new county councils in Wales will suffer substantial loss as a result of the changes we are discussing. All but South Glamorgan and West Glamorgan will be far worse off. The total net loss in the whole of Wales is calculated to be about £7·8 million a year.
Therefore, the new authorities will face an agonising choice between reducing expenditure on vital services and, in attempting to maintain the level of vital services, making a substantial increase in their rates. For Dyfed it would mean an increase of no less than 35 per cent.
Added to that, there is the curse of inflation and also the need for the general improvement of services now at a low level. Dyfed can therefore think realistically in terms of a 50 per cent. increase in its rates.

Mr. William Edwards: There is an additional danger that in the sparse rural areas, many of which are among the most beautiful in the country, a poor county council will feel a great temptation to try to increase its revenue


by allowing development to go ahead in national parks and areas of high natural beauty to increase its rating base.

Mr. Morgan: My hon. Friend has made a very fair point, and I am grateful to him. It would be a short-sighted policy, but the temptation is one to which people will undoubtedly succumb, because the demands for higher rates will fall upon areas with little natural growth, and where that growth takes place it does so in domestic property rather than commercial or industrial property.
The situation does not affect all authorities in the same way. There are not only losers but gainers from the new formula. It appears that by and large there is a substantial net gain to be achieved in the application of the formula to urban areas. For example, Greater Manchester could maintain its present services under the new formula, even with a drop of 11 per cent. in the rates, Merseyside could do so with a drop of 13 per cent. in the rates, South Yorkshire could do so with a drop of 6 per cent. in the rates, and the West Midlands could also do so with a drop of 5 per cent. in the rates. Therefore, if I am right in this contention—as I very much fear I am—these proposals constitute a vicious blow to local services in areas which have least capacity to raise additional revenue by way of rates.
My own constituency of Cardiganshire is an area which is isolated from the rest of the country, with poor rail and road links. It already suffers cruelly from the outward migration of the young. It is a sparsely populated area, lacking capital to introduce the dynamic of growth. It has an ageing population, a network of small roads to maintain and so on. How in the name of reason can a community such as that raise over one-third more revenue by way of rates? In Cardiganshire the income per head is among the lowest in the whole of Britain and, closely connected with that, we have the lowest percentage of insured population employed in manufacturing industry—only 9 per cent. In those circumstances, the new formula will mean either a cruel diminution in the standard of services at present provided—incomplete though they be—or a wholly intolerable additional burden upon the ratepayers of Cardiganshire.
It is right that those of us from Wales should ask: what has the Welsh Office done is this matter? Did the Secretary of State for Wales turn like a tiger upon his colleagues in the Department of the Environment when he heard of these proposals, or did he purr like an elegant Persian cat? Did he attempt to spell out to the Government the statistics of misery in relation to Wales, or has the case of the Principality gone by default? Has he made it his business to research in detail the facts relating to Wales, or has he deliberately turned a Nelsonian blind eye on to the whole situation? If he has done the latter, quite clearly he can have no claim to having properly discharged his stewardship towards Wales.
Despite the fact that in Clause 4 of the Bill there appears to be a laudable flexibility which local treasurers will enjoy vis-á-vis the Treasury which does not exist at the present moment, and despite all the euphemisms that are adopted in the consultative document in dealing with all the changes, which are described as
substantial improvements to the system of Government grants",
it is my contention that the purpose of Part I of the Bill is to set up machinery to rob the weak in order to sustain the strong, and that the effect over the whole of Britain will be to channel hundreds of millions of pounds away from the rural areas to the urban areas.
For decades there have been attempts by successive Governments to alleviate the problems of areas in greatest need, many of which were rural localities. This was never achieved as a complete process of equalisation. It could be only a crude form of deficiency payment, for where an area enjoyed services that were above the average it was not penalised in any way, and there was no question of levelling down to a uniform standard. The formulae were never designed to achieve specific results. The system appears to have been designed as a crude and rather homely form of horse-trading taking place every two years. No specific objective was ever spelled out in relation to the system, and no comprehensive study of it has been made by any Government.
Having decided to proceed with such vigorous haste in relation to local government reorganisation, the Government could well have paused and dealt with


certain acute problems of urban need under the machinery set up for that purpose and then—I agree completely with what my hon. Friend the Member for Small Heath has said—set up a Royal Commission to deal not only with the question of alternative sources of revenue for local government but, at the same time, to make a detailed analysis of cause and effect in relation to the whole formula system as we have seen it operate over many decades. Then, armed with the full facts, the Government could have acted and shown a determination to deal with the diverse needs of various localities in a fair and equitable way.
Lest I be suspected of having a completely prejudiced and jaundiced view of the Bill, may I hasten to say that I find in it one or two matters which are perfectly palatable. It would be rather difficult for any Government to introduce a miscellaneous provisions Bill without achieving such, either by design or by accident. May I note that it appears from Clause 6 that it is the intention of the Government that more substantial funds should be directed from central Government to assist local government with transport problems in rural areas? If that is the intention, I certainly welcome it. But the drafting of Clause 6 is so imprecise as to make it impossible to arrive at any conclusion on that score. I should be grateful if the Minister would confirm that the level of grant will certainly be higher than the 50 per cent. now enjoyed, and if he would consider whether a realistic figure is of the order of at least 80 per cent. When Section 34 of the Transport Act 1968 became law, it was a very radical and progressive proposal. Since that time, however, a great deal has happened in relation to the fortunes of rural transport systems, and the bill that has to be faced by many authorities is so crippling that the situation demands a very substantial subvention from local government.
I also welcome the proposal in Clause 15 to allow local authorities to levy a 100 per cent. rate on unoccupied property. This will go some way towards solving the problem, which we find in a very acute form in rural Wales, of owners of holiday homes enjoying the occupation of a house for only two or three months in a year and then leaving the place empty and making no contribution whatever to the community. Of course the problem

goes very much deeper than that, and the creation of a strong and vigorous economy is the only way of tackling the problem. It is a source of very great worry to us who live in the countryside to see the disintegration of a community in this way and to see that process subsidised out of local government finance by grants being given towards homes of this type.

Mr. James Allason: Is the hon. Member suggesting that the owners of such homes should move their furniture out for the nine months of the year when they are not in them? Otherwise they will be paying rates on furnished property.

Mr. Morgan: No, it is not so simple as that. The dividing line between property which is furnished and property which is unfurnished is a pretty thin one, but I do not want to go into great detail.
I return to what I said at the beginning of my speech. Part I of the Bill is its heart and kernel, and I think that its heart is totally evil. For that reason, I urge my right hon. and hon. Friends on this side of the House to oppose it.

Mr. Oakes: Before my hon. Friend sits down, may I revert to the point about empty properties? Is it not true that many people buy second homes and leave them empty until they retire while there are people in the area badly needing homes?

Mr. Morgan: That is the case, and it is the curse of the countryside to have large numbers of properties unoccupied for most of the year.

6.40 p.m.

Mr. James Allason: Although I agree that second homes in Wales may well be a curse, the hon. Member for Cardigan (Mr. Elystan Morgan) was referring to cases where houses were occupied for only three months of the year. He ought to know that in such circumstances rates are paid for the full year.
I want first to refer to the report of the Expenditure Committee, published in January of this year, dealing with urban transport. It recommended that some provision should be permitted for operating subsidies for public transport. What was intended was the redistribution of existing transport expenditure away from


the provision of urban roads towards subsidising public transport. This is now permitted by Clause 6 of the Bill, where there are four heads of expenditure that are to be combined—public transport, highways, the regulation of traffic and the provision of parking space.
As I understand it, this means that there will be one grant for the four purposes and it will be left to local authorities to spend it as they wish. It will give greater discretion to local authorities, which we welcome. What is more, it will stop the feeling of local authorities that they are getting a grant for roads, that they have to spend it on roads and that they must go on developing roads in urban areas, whereas they have no grant for subsidising public transport, much as they wish to do it. The situation will change from April 1975. It is a great step forward and it is to be welcomed.
I turn now to the question of the domestic ratepayer. I have a great deal of sympathy with the speech of the hon. Member for Cardigan. We should remember that the average rate paid by the domestic ratepayer in 1951–52 was £16 8s. By 1964–65 that had about doubled to £32 8s. 5d. That represented a rise of 5½ per cent. per year at compound interest. It was a substantial sum, greater than the increase in the cost of living over that period. However, £32 a year in rates was a tolerable average.
Since then the domestic rating situation has become totally out of hand. I have the Hertfordshire figures for the last four years. In 1970–71 the average rate figure was £61·91. Hertfordshire pays slightly above the national average both in rate poundage and in rateable values. But that is still an indication of how the rate burden has increased. Much worse was to come. There was an increase in the following year of 7½ per cent. There was an increase the year after of 15 per cent. This year we have had yet another increase, this time of 13 per cent. The result is that the average rate is now just under £88.
Rate levels of this order for domestic ratepayers are quite intolerable. For that reason I welcome the generous rate rebate scheme which will affect 3 million ratepayers. But what about the other 14

million, many of whom find it a great struggle to continue to live in their homes and to pay their rates? Some of them have retired on what they thought were adequate incomes. They believed that, having worked hard all their lives, they could retire in comfort. Instead, they find life very difficult as a result of these rate increases. I am speaking now of the average person. Many people in my constituency were hit severely by the exceptional rate increases last year which were due to revaluation. They received some help from the Government. I remind the House, however, that rate increases of 30 per cent. were not exceptional.
As the hon. Member for Cardigan pointed out, the effect of the Bill is to increase the resources element and to reduce the needs element. In other words, the Bill will give further help to the cities and reduce the help given to the rural areas. The theory is that it will remove the grant from the rich rural areas and give greater help to the cities of the North.
That is not always the position. Rateable values are notoriously unreliable. In Wales, for example, they are incredibly low. Those in the South of England are substantially greater than those in the North. It has been calculated that a council house in West Sussex will pay 40 per cent. more rates than an equivalent council house in the North of England, even though its occupant receives an income which is only 10 per cent. higher. This is the great Robin Hood act of taking from the rich and giving it to the poor. The result of this Robin Hood act in Hertfordshire is that there will probably be a reduction in grant of £4 million. That represents a 10 per cent. increase on the county precept.
In addition, the county has to meet the costs of inflation, and on top of that it has to meet the cost of an expanding population, bearing in mind that Hertfordshire is expanding due to the growth of new towns. Happily the situation will be cushioned to an extent by the substantial increase in the domestic element which my right hon. and learned Friend announced today. But it will still mean that once again Hertfordshire rates will be the subject of a very substantial increase. I believe that the situation has


reached the point in Hertfordshire, and, I suspect, pretty well throughout the country, where domestic ratepayers should not be asked for any more.
In 1955 there was industrial derating, and that was modified. As a consequence, for the only time since the war there was a moment when domestic rates fell. In 1956 the average rate poundage fell to 16s. 2d. from 23s. 4d. the previous year. That was a dramatic fall. It meant that rates were held down for several years by this means. Now there is no industrial derating, and that means that there is no slack to take up there.
It is possible to transfer a greater burden of the rates to commercial premises. Such premises are paying voluntarily, by an act of the market, substantial rents. We have heard of office rents as high as £10 a square foot in London. In these circumstances, commercial premises are an element which can be taxed to a greater degree. I do not know whether we can have super-rating for commercial properties, but the alternative is to have derating for industry and domestic properties. As my right hon. and learned Friend has said, for domestic rating there is an element of 20 per cent. derating payments. That is not enough. We need a substantial change.
Let us have something dramatic of the sort we had in 1956 so that rates fall. We would then have a reasonable hope of being able to afford to pay our rates. That would be a pleasant change. There is a great deal of need for rating reform, but there is no easy way of reform by lotteries or by specious alternatives. It must be by a redistribution among existing ratepayers. The domestic ratepayer cannot afford to continue with the present burden.

6.52 p.m.

Mr. David Austick: The subject of the debate deeply concerns almost everybody in the United Kingdom. It concerns the life of our society in such a way that even education is affected by it. As a newcomer, however, I am surprised to discover the low key in which the debate has taken place.
I was pleased to hear the interesting and even courageous contribution of the hon. Member for Harwich (Mr.

Ridsdale). It seems that there is in the Bill too much too late or too little too late. Perhaps some of it is too early. In some ways I find it a dangerous Bill because of the provisions which it contains which have been delayed so long. As a member of local government in the North of England, I have been extremely concerned about the delay of certain parts of this measure. Now that the Bill is presented to us, I am equally concerned that it contains some measures which need not yet have been introduced.
As most of us know, all local authorities and their staffs are currently engaged in a heavy programme of work connected with the reorganisation of local government. That work will not be completed for many years. It is having a devastating effect on some of the services, particularly on education. That some of the measures should be introduced now, so as to make the continuation of that work difficult, is bad.
At first sight the Bill appears to be merely a sophistication of much existing legislation. However, when we look deeper there are some difficult parts of it which we should treat carefully. It seems that there are far too many provisions for items to be levied as a consequence of regulations. Clause 6 seems to be a parliamentary lawyer's dream world.
Although we might regret certain omissions, there are many provisions which are welcome. As has already been said, the Government could have introduced new sources of income. The big disadvantage of the present rating system is that it is in no way related to the change in the value of money. The Government have again missed an opportunity, despite their dislike of change, to introduce other forms of raising revenue. Despite the smokescreen raised by both Conservative and Labour Members, the Liberal Party still believes that site value rating should be considered seriously. It is important that the principles of that system of rating should be clearly understood.
There are other forms of alternative income which could be considered. We could have local income tax or a local company tax. Such taxation could form additional support for the present rating system. The hon. Member for Birmingham, Small Heath (Mr. Denis Howell)


took a long time to deal with his approach to the new sources of revenue, but he did not do what was obvious: he did not suggest that there should be a supplementary form of revenue. That was mentioned by the hon. Member for Devizes (Mr. Charles Morrison).
We should not assume that we should dispense immediately with the present system of rating. We must consider a supplementary form of revenue which might eventually take over. It is to be regretted that rate relief is not yet to be completely transferred to the Treasury. Although the suggestion has been made that the local authorities would be better off with only 10 per cent to find instead of the present 25 per cent., that is misleading. I have spoken to a number of treasurers, and they think that there will be little change. Some of them feel that they will be worse off.
It is a pity that the Government have not had the courage to transfer 100 per cent. responsibility for students' grants to the Treasury as the level of grant is now mandatory. I know that many treasurers are concerned that nothing is included in Clause 2 as to how the global sum for subsidy is to be spread over the elements of need, domestic rates and resources. It is considered dangerous that that should be left to the discretion of the Secretary of State.
It must be remembered—I hope that this matter will be considered further—that any increase in the needs element could result in a decrease in the two elements granted to non-metropolitan district councils. Any substantial change from the present pattern of distribution of the global sum will adversely affect the level of rate levies. This, combined with the changes due to reorganisation, will cause consternation to ratepayers, particularly in the rural areas. It is important that rural areas should not be deprived of their financial support in order to help out urban areas. The present changes are quite unfair to sparsely populated areas. We welcome the Secretary of State's assurance about special help to hold domestic rates. We hope that his final proposals will bear out what he has suggested.
I have said that the Bill is weak. As an indication of its weakness I refer to

the clause dealing with transport matters. There is no indication in the small print that greater priority will be given to public transport than will be given to provision for parking. We welcome the proposal to appoint local ombudsmen. There is no doubt that many of the frustrations with national government stem from local government level.
Complaints should be treated as being of greater importance. Liberals have long advocated the need for a proper channel of complaint and for impartial investigation of such complaints. We are sorry that there is no provision for the investigation of local authority contracts, or for commercial dealings, except in land. There is a big weakness in that the Ombudsman has no sanction other than that of publicity. This makes his job a bit of a farce.
We also welcome the new flexibility to be given to legislation concerning the rating of empty properties. This allows much more local discretion to deal with differing circumstances. This, taken together with the new method of assessing grants from central Government, will ensure that local authorities will be encouraged to maximise revenue from this source.
There is a relaxation of controls suggested in the Bill. Speaking as a councillor I can only welcome it. I know that the officers of the council on which I serve will be pleased about it. There is a clause which perhaps gives the lie to this relaxation. I refer to Clause 5(4), which suggests that the Government intend to tighten up controls by a back-door method. I am astounded that such a step could be taken without any consultation as to its implications in a Bill which professes to allow a relaxation of certain Government control over local authority services. Clause 5 (4) refers to Section 99(1) of the Education Act 1944.
The implication of a new and all-embracing control across the board, and not the mere withholding of money as is the case under the present rate support grant, is disturbing. The proposal is to extend the arrangements of Section 99(1), and it is completely unacceptable. Clause 5(4) specifically states that this section shall be applied to other matters. For all practical purposes it means that local authorities become the agents of


Government Departments. Such a move could only discourage both members and officers from taking part in local government—

Mr. Graham Page: I think that I can clear up this point. There was no intention of drafting the clause to make it as extensive as the hon. Member suggests. I appreciate that it could be read as he has said, but I am assured by my parliamentary draftsmen that it would not do what the hon. Gentleman suggests it would. It applies only to Section 99 of the Education Act.

Mr. Austick: I am grateful for the manner in which the Minister has cleared up that matter. I hope this will be dealt with in Committee. Despite the assurance on that point, I still feel that the Bill is weak and will not achieve its stated objectives. For this reason, we shall support the Opposition's amendment.

7.7 p.m.

Sir Bernard Braine: As I have some criticisms to voice, I think it would be ungenerous if I did not welcome at least some of the Bill's provisions. I am glad that part of the heavy cost of education is to be removed from local ratepayers. That is a move in the right direction, although, I agree with my hon. Friend the Member for Harwich (Mr. Ridsdale) that it does not go far enough. I am pleased too with the provisions for better rate rebates. That is good news for a large number of ratepayers on relatively low incomes.
I am glad that modest help is to be given to the disabled who, whatever their means, always live under a disadvantage of one kind or another. I am glad too that my right hon. and learned Friend the Secretary of State has met the point which I tried to make vigorously to him earlier this year about the level of statutory deductions from gross values. That will be helpful to many people on low incomes in lower-rated dwellings.
Nevertheless I beg leave to doubt that these interesting new provisions will wholly compensate for the burden which the Bill may—I say "may" deliberately—impose on ratepayers, especially in my constituency, if what is so far proposed in respect of finance is implemented. It may be that what my right hon. and learned Friend said today about an in-

crease in the domestic element of rate support grant will give an encouraging measure of relief, but it is impossible for us to evaluate what such an increase will mean. My right hon. and learned Friend must not mind if we are critical of the financial implications of the Bill as they appear at the moment because he brings a Bill before us before even the treasurers of local authorities can evaluate what is proposed.
My own constituency has a direct interest in this. My right hon. and learned Friend will remember the strong protest I made in this House on 25th May about the heavy increases—increases well out of line with what was happening in a good many other parts of the country—in our rates in South-East Essex. Arising out of revaluation, Essex ratepayers as a whole suffered a loss of resources grant of some £2 million. Because valuations in the past in South-East Essex had been on the low side, a situation further distorted by the deliberate postponement of the valuation due in 1968, the increase was exceptionally heavy.
Some leveling-up was inevitable. It is only right and fair that there should have been a leveling-up and I make no complaint about that. It seemed wrong to me, however, that our ratepayers should be asked to bear the whole of the consequential increase all at once, in a year when the Government—for good reasons which I support—had imposed restraint on incomes. This is unfair. The essence of any system of taxation is that it should be fair and seen to be fair.
The least one could expect, therefore, was that care would be taken to ensure that there was no further increase in the burden during the coming year, other than perhaps some allowance for increases in costs following inflation. But what did we find? The first report of the Grants Working Group set up to consider new ways of calculating the needs and resources element of rate support grant came up with proposals which would have resulted in a probable loss of grant to Essex of £8 million to £9 million. The burden which that would have imposed would have been totally unacceptable.
The group then had a second look at the matter and came up with a revised estimate which looked like involving Essex in a loss of grant of £3 million to


£4 million. This time the loss was cut by about half. Even so, coming on top of the current year's loss of resources and all the pain which this has caused to my constituents and others, this too would impose an impossible burden.
It appears that county treasurers in the Home Counties are not only critical of these latest proposals but are also utterly unconvinced so far that they have been worked out properly. What is clear is that the proposals have been rushed through—I can only go on the information at my disposal at this moment of time—without proper consideration of their effect on individual counties. The group itself recognised that the proposals were of only an interim nature.
I shall be brief, because other hon. Members wish to contribute to this important debate, but wish to make two final points. First, after the protest which I made in the House earlier this year the Government cannot expect me to support any proposals which add disproportionately and therefore unfairly to rate burdens put on my constituents. I cannot stress too strongly the fact that if people are to be expected to support the Government's prices and incomes policy and so to exercise restraint—and I go along wholly with that view—there must be restraint in the demands put upon them by rates and taxes. Accordingly, until a fairer system is worked out I would expect the Government to postpone implementation of these new proposals for at least a year. It would be possible to amend the Bill in Committee to provide for this. If there are any arguments against such a proposal I hope we shall hear them.
There would be considerable advantages in postponement. There is the negative argument that it is hardly fair to new authorities—authorities which hope to have the good will of ratepayers from the outset—to expect them to impose swingeing increases in rates. Since the ratepayers are hardly likely to see any increase in services—and in my constituency we are already beginning to burst at the seams in some of the schools—ratepayers will inevitably blame increases in rates on local government reorganisation.

Mr. Michael Shaw: Perhaps I have not followed my

hon. Friend's argument, but has the committee which has studied these matters in his constituency also stated what would happen to the rate burden next year if there had been no alteration?

Sir Bernard Braine: I am afraid my hon. Friend did not pay attention to what I said. I was not talking about a committee in my constituency but about the Grants Working Group—a working party representing both the Department of the Environment and the local authority associations. That group has been hard at working devising formulae which are still inadequately grasped by local authority treasurers and which have frightened the daylights out of some of them. It may be, of course, that we are being unduly anxious on this score. Indeed, some of the things said by the Secretary of State this afternoon gave me encouragement that second thoughts are beginning to prevail. For example, there was my right hon. Friend's announcement of an increase in the domestic resources grant. I was delighted to hear that, but the fact remains that the Bill is before us without our yet having all the facts upon which to base a proper judgment. In any event, why not start with a fresh system when the new transportation grants are introduced—not on 1st April next year but 1st April 1975.
Another strong argument for postponement is that it is surely wrong to implement these proposals without first weighing carefully the possibility of going much further than my right hon. Friend seems prepared to go in relieving local government of the need to finance whole services or substantial parts of them—as my hon. Friend and I suggest in our amendment—or in raising more revenue by entirely new methods, or both.
I come now to my second point. I was truly astonished to learn a few days ago that the working group's proposals—which will provide the basis for any order made under the Bill—have made no allowance whatsoever for the additional cost of providing services in those counties that border on London and the need for ample cushioning arrangements which will minimise the loss of grant to losing authorities compared with that which they would have received by the application of the existing grant formulae to the new authorities. It is as though


some arbitrary decision has been taken on the line that where Greater London ends and one crosses the border one is in rural Essex, rural Hertfordshire or rural Surrey. But a stranger to London—say, a visitor from the North—would not know when he passed from Greater London into neighbouring Essex, Hertfordshire or Surrey.
These counties have metropolitan areas, with all the problems and difficulties that these bring. Thus, I should like a firm assurance that this anomalous and unfair situation will be reconsidered before the Bill makes any further progress. Indeed, there can be no question of my voting for any order made under the Bill until we have full and adequate assurances that our special problems in Essex—which I believe are shared by Hertfordshire, Surrey and other counties round London—are recognised and taken fully into account.
Several hon. Members have stressed how little time has been left before the Bill becomes operative. At present, county treasurers do not know where they stand. I hope that my right hon. Friend the Minister for Local Government and Development, when replying to the debate, will say something about the timetable and will tell the House how the negotiations are proceeding. I appreciate that he will not be able to tell us everything, but I hope that he will be able to reassure worried county treasurers that the system to be imposed will be fair and just. I sense that this debate will have marvellously concentrated my right hon. Friend's mind and that he will now move with the utmost speed and explain these matters with the utmost clarity.

7.20 p.m.

Mr. Kenneth Marks: It is a scandal that the House should have to discuss the Bill at this stage in this parliamentary Session. It could and should have been introduced last year or even the year before. The hands of hon. Members are tied by the timing of the Bill. While we may speak about it now and oppose it at length in Committee, as we should, and put forward various alternatives, the local authorities will find themselves in an even worse state than they are now.
The Opposition's amendment rightly condemns the Bill for not making provision for additional sources of local government finance other than the rating system. I should have preferred systems instead of rates rather than in addition to rates.
In their consultation paper the Government state in paragraph 2:
The Government believe that the public would not welcome, at the present time of price and pay restrictions, the introduction of additional new taxes locally.
What public are we talking about? Have the public been asked whether they would rather have rates or a tax based on income, wealth, or something like that? What public do the Government mean? I suspect that it is those who would perhaps pay more under a different system.
Why did we have a consultation paper instead of a White Paper? This is an important Bill on local government finance. Local government rates, as we have been told, collect about £2,400 million a year, and a Government grant of £3,000 million is added to that. This is a tremendously important Bill. Yet, instead of a White Paper giving the Government's intentions for discussion in this House, in the Press and everywhere else, a consultation paper goes out to local authorities and others. That was not good enough either.
The consultation paper states in paragraph 4:
The Government's proposals are intended to achieve two principal objectives. The first is to share the cost of local services fairly, both among individual local inhabitants having regard to their relative ability to pay and also between the general taxpayers and the local ratepayers.
Neither the Bill nor the rating system does anything of the kind.
The Government talk about the public not wanting change at this time, but in the middle of a freeze they brought in revaluation of rateable values so that some people had considerable increases in rates. Now they say that it is a bad time for change.
The Government have again got themselves into a mess. There was the mess on revaluation coming at a time of freeze. There was the mess caused by the Government's statement that they would monitor the estimates of the various local


authorities to ensure that they did not increase them too much. Twelve men in Whitehall or Marsham Street were given the job of monitoring thousands of rates for local authorities. Now there is an even bigger mess because the Government have introduced a Bill which should have been brought in a long time ago.
There has been a mild defence of the rating system by my hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant). It has one objective, I suppose: that it is easy to collect. It probably costs less to collect than any other form of tax. However, it is a most regressive tax. The poor pay more in proportion to their income than in any other tax. It is unfair in that respect.
Rate rebates, although they help the people at the lower end of the scale, do not solve the problem. Figures were given for a man and wife and two children with an income of £18 or £26 a week. They will get some help. However, it does not alter the totally regressive nature of rates. If we are to alter the system we need a sliding scale through the income levels for rate rebates. However, that would involve a tremendous amount of administration by local authorities and this cost would add something to the rates.
The Secretary of State said that compared with the 800,000 people now in receipt of rate rebates there would be 3 million in future. He did not say how many of those 3 million are already on supplementary benefit and to whom this will make no difference whatever. The only change, if the Bill is accurate and the system comes forward, will be that money given by the Supplementary Benefits Commission will be transferred to the local authorities. They will get 90 per cent. of it back, but the other 10 per cent. will go on to the rates. I suspect that a large proportion of those 3 million will be people who are at present receiving supplementary benefits.
There are alternatives to rates. I tire of hearing Ministers in successive Governments say that things are administratively impossible. They used to say that about annual reviews of pensions. I believe that it is administratively possible to base the collection of tax, where we now have rates, on income or on wealth. That, combined with a system of Government

grants, would be fair and would give local authorities the money they need.
It is not only the rating system which is a nonsense. The system of valuation is sheer mumbo-jumbo. One has a hypothetical rent. Somebody has to decide what the rent of a house would be in a hypothetical market with hypothetical tenants and landlords. At the last revaluation the local valuation court used my house as an example to prove its case. It produced the rents of three houses which were said to be comparable with mine. In an area of Greater Manchester where there are a million houses, only three houses were chosen to give the rental figure. Actually eight houses were included on the form sent to me, but five were discounted after the court decided what the rateable value for my house should be. We had an argument whether my house should be assessed at 2s. 4½d. or 2s. 5½d. per square foot. There was a complete lack of rent evidence then as there is now. Increasing numbers of houses are being built for sale and increasing numbers of rented houses are going over to owner-occupation. To attempt to use a rented system to assess what people should pay for the services they get from a local authority is nonsense.
If a householder objects, he can talk about the matter to the local valuation officer and if, in that officer's view, the householder has a good case, it does not need to go before the valuation panel. This is not only unfair but is inaccurate and a very poor system on which to base the collection of so much money.
If we are to continue with rating, capital value would be a more accurate system because it could be changed more often than every five years. Indeed, if it were based on the capital value of a house, it could be left almost to self-assessment because people would say what the value of a house was.
The system proposed in the Bill will continue the procedure of rate support grant negotiations. These are often more secret than even anything at the Ministry of Defence. Parliament knows nothing of what goes on anywhere. Individuals may know—for example, the treasurer in a town who may be representing the local authority association in discussions—but local authorities as a whole do not have


a clue what is going on in these negotiations any more than do Members of Parliament. This is called open government. No doubt in December we shall get a piece of paper with a formula, 0·75p or whatever it may be for all children between 5 and 15 years of age, and half a day to discuss it in Parliament. Public finance to the extent of £5,000 million will be discussed for only half a day in this House.
I welcome the additional help which the Government say they will give to the cities and hard-pressed urban areas. I do not know precisely how they will go about doing that, or how much help they will provide, but, having on a number of occasions suggested that the rate support grant system was anomalous and unfair to the cities, I am glad to see that my plea has finally borne some fruit.
There are worries about the establishment of local government commissioners. Most hon. Members will welcome these appointments, because many people regard their Member of Parliament as their ombudsman and the present system is not always satisfactory. Complaints to the Parliamentary Commissioner go through Members of Parliament. It is proposed that in future councillors should have a similar function, but I do not think that Members of Parliament and councillors have the same functions.
More than 500 Members of Parliament are not involved with Government Departments concerned with complaints. Only about 100 Ministers are directly concerned as representing Departments. The set-up in local government is different, because every councillor is in some way directly involved with one or more committees of the local council. It will not be satisfactory to the general public if complaints go only through councillors.

Mr. Graham Page: I think that I can correct the hon. Gentleman. The complaint should go through the councillor first, but Clause 25 provides that, if the councillor fails to put the complaint to the ombudsman, it can be put to him by anybody, including a Member of Parliament.

Mr. Marks: I am glad to hear that. If there is to be a system of complaining to somebody about faulty administration, the person making the complaint ought to be able to go direct to the appropriate

authority. There must be a much broader scheme of district officers, unconnected with both local and national Government, to whom people can go with their complaints and grumbles and even if they wish only to make inquiries.
Criticism has been made of the fact that some of the new local authorities may find that they are increasing their expenditure compared with that spent by the old authorities. In some cases that will be inevitable. From April 1974 my constituency will be partly in the city of Manchester and partly in the new district of Tameside. The changeover will make little difference in Manchester. The Lord Mayor will put on his other hat and become chairman of the district council, and there will be little change for the other councillors.
In Tameside, however, nine local authorities will combine. None of these is a major authority. They are all subsidiary authorities to Lancashire and Cheshire County Councils, and it will be extremely difficult and expensive for them to have a set-up comparable to that in Manchester. I hope that, whatever thoughts the Minister has in mind for future negotiations, he will pay heed to the needs of authorities faced with that kind of problem.

7.34 p.m.

Mr. Michael Shaw: I was greatly interested to hear the hon. Member for Manchester, Gorton (Mr. Marks) talk about the commission, or what one might call the local ombudsman. In many ways I share with the hon. Gentleman misgivings about the new commission. I agree with him that the position of councillors is different from that of Members of Parliament and that putting a complaint to a councillor is very different from putting one to a Member of Parliament.
My hon. Friend the Member for Devizes (Mr. Charles Morrison) hopes that the services of the commission will be used sparingly. I believe that its services will be used a great deal, and probably far too much. One of the difficulties and embarrassments confronting councillors, because they will have no alternative as it will become known if they refuse to send on a complaint, is that they will become something of a post office. They will receive complaints and they will have to pass them on.
I am not sure that there is any real virtue in that, in the average case. In some cases there will be, but in most cases it would be better if the complaint were made direct by the complainant. He can take the matter up with his councillor, who can himself complain to the ombudsman in suitable cases, but I think that this service will prove very different from what we have nationally.
The hon. Member for Birmingham, Small Heath (Mr. Denis Howell) said that there was a need for new and adventurous thinking. I agree with that, but the overall need is for some helpful action and that is what the Bill is rightly all about. The hon. Gentleman and my hon. Friend the Member for Harwich (Mr. Ridsdale) think that we should reform local government taxation before reforming local government itself. I cannot agree with that. To do that would be to do things the wrong way round. Until the local organisation is set up it is not possible to study in detail the type of tax system that is most suited to it.
For many years I have taken an interest in and been an advocate of change in our local taxation system. Indeed I have advocated a change in our whole taxation system, both local and national. Many years ago at a Conservative Party Conference held at Llandudno—the fact that it was held there shows how long ago it was—I moved a motion and mentioned a strange new tax called VAT—it is not so strange today.
Rates are an old form of taxation. They are easy to administer and they are certain in their incidence. In addition, they are cheap to collect. I believe, therefore, that we should be very careful before considering abolishing them. But they are regressive, as has been said today, and their burden often has little relationship to the ability to pay. Nevertheless, because of their ease and cheapness of collection, because they are understood and because the machinery for their assessment is in operation, the rating system must be continued as the main form of local taxation.
However, having said that I fully accept that the level at which rates are levied must be limited, otherwise the unfairness of the system becomes intolerable. I believe that that has been accepted in

the debate, and that leaves us with the problem of where the extra money comes from if the amount which we can draw by rates is limited. Instinctively we look—as the Opposition amendment has looked—for a tax that can be administered by local authorities and is linked, as rates are not linked, with consumption or income, or with both. In other words, we look for a tax with a built-in growth factor that makes the collection of tax so much easier. But the more that one examines the problem the more difficult it becomes to choose a system, other than rates, that is really suitable.
There are varying systems of local taxation abroad. The systems which I have looked at have been in America. But as one examines these systems one finds borne in on one that there are great differences in the circumstances in America and in Britain. The main difference is the density of population in Britain and the interdependence of one area on another. We are, indeed, one community, one nation. I believe that it is on this matter that the people who want to hack our country about are going wrong. We are very interdependent. There is tremendous movement in this country, with people living in one area and working in another. This occurs wherever one fixes the boundaries. There are special difficulties in finding an appropriate form for new local taxation in Britain, yet the new authorities begin to function next April.
I do not believe that it is right to try to delay the Bill. But it is both needful and appropriate that the means by which the new authorities are to finance their activities should be examined and defined. In the Bill it has been decided to develop the existing local rating system together with the methods of grant aid from the centre to support it and, perhaps most important of all, to curb as many as possible of the injustices that are inherent in that rating system.
I was glad to hear the Minister say at the outset that he did not regard the Bill as the final answer to local government finance. Had he not said that I would have urged it upon him. In its approach the Bill is appropriate to the present time. No one has yet made a case for any new tax that can be locally administered. It was interesting to note


that, although the hon. Member for Gorton said that there should be an alternative form of tax, he did not spell out in the slightest way what that alternative should be.

Mr. Raison: My hon. Friend will agree that it was also interesting to note that the Opposition spokesman said that the answer was to set up a Royal Commission. That would have the advantage of deferring the issue for several years.

Mr. Shaw: I am grateful to my hon. Friend. The hon. Member for Small Heath did say that, and he recommended that a whole list of proposals should be put to that Royal Commission. When listing most of the proposals, the hon. Gentleman said that he personally did not agree with them. Therefore, we can see that there are serious difficulties in finding another tax.
There is a further factor. There is an overwhelming argument at present for having no further new taxes. We are in the middle of the biggest upheaval in local government in modern times. We are also in the middle of changes in the national taxation system, with more to come. The time has come when the new authorities should be allowed, as far as possible, to sort out their new arrangements and to get their organisations working properly and efficiently. It is a time not for new taxes but for taxes which we know and understand. The task of the newly elected members of the authorities and their appointed staff must be to get the new organisations working smoothly and efficiently, without the worry and the added burden of trying to work a new tax. While, in theory, the public may agree to changes, the fact is that whilst those changes are being put into practice they are bound to be unpopular and to create uncertainty. Only when changes have become settled in and a part of life are they accepted and taken for granted.
I welcome the Bill's two main points. I welcome the easing of the education burden. In the years to come national Government may well take over more and more of the education burden, which is by far the biggest element in the expenses of local authorities. It is right that we, nationally, should take over 90 per cent. of the university and teacher-

training awards. I agree with earlier speakers in the debate that there is a case for taking them over altogether.
I should like to tell my hon. Friend the Member for Essex, South-East (Sir Bernard Braine) that in the Scarborough area the proposals for the rate rebates are welcomed. My hon. Friend probably has good grounds for fears in his area, but those are not at present shared by my local authority. On the subject of rebates, the Government have not yet received the credit that they deserve for their fair rent schemes, which are far more widely appreciated than has been fully disclosed.

Mr. Neil McBride: Would the hon. Gentleman say, for example, that tenants of corporation houses who have had a lodger but who do not now have a lodger should be condemned as they are, to pay the lodger charge until the final progression towards fair rent? It is iniquitous.

Mr. Shaw: If their income is increased, that should be taken into account. But in my constituency many families have benefited from the rent rebate and allowance scheme and I am sure that they will also benefit from the new rate rebate scheme contained in the Bill.
The chief fears that have been aroused on publication of the Bill have been taken care of by the proposed domestic derating. Although the rebate system will help those on the lowest incomes, one must always remember, particularly if representing a seat such as Scarborough, that there are many people who have retired from good jobs, who have saved up over the years and who have established a standard of living in their retirement that is adequate for their needs but leaves little extra for emergencies. Any sudden increase—in rates, for example—can cause real hardship to their plan of living. Therefore, the effort that is being made by the Government, producing a minimum—I think that that was the phrase used by the Minister—of 10p in the pound and an average of a 20 per cent. derating, will be of real assistance to them.
I hope that the Government will confirm that when the new authorities are established the Government will look at


this matter again and, if necessary continually, to see whether, in the light of experience, new and helpful taxes can be introduced under the administration of and for the benefit of the local authorities. For the time being, I believe that the Bill is both necessary and desirable.

7.51 p.m.

Mr. James Wellbeloved: I believe that before embarking upon a Bill to alter the rate support grant we should have had the benefit of a careful and up-to-date review of the alternative means of raising local revenue. I fully support, therefore, the suggestion of my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) for a Royal Commission to examine the various proposals so far. My hon. Friend the Member for Manchester, Gorton (Mr. Marks) mentioned but one—the transfer of capital values.
I wish to deal briefly with the impact of the Bill on the citizens of Greater London. It is of no help whatever to these hard-pressed ratepayers. In fact, it will make what is a most difficult situation almost a desperate one for London borough councils and the Greater London Council. The resources element in the grant will still be based on rateable values. That is a grave injustice to the people of London, because rateable values there are much higher than elsewhere. That means that, on average, these ratepayers pay about 50 per cent. more than other ratepayers. Therefore, we in London have a particular grudge against the Government for not having seized the opportunity of taking radical action to change that unfair position. No doubt some of my hon. Friends who may serve on the Standing Committee on the Bill will want to put down amendments to deal with the situation.
The other unfairness for London is that in the rate support grant formula is an element that covers the extra burden that London has to bear. I believe that the GLC gets about £9 million in grant under that heading, but all that is to be wiped out because that element in the formula—

Mr. Graham Page: indicated dissent.

Mr. Wellbeloved: I am glad to see the Minister shaking his head. It only

goes to show how badly drafted the Bill is. Eminent people in London who have studied it and claim to have been consulted about it advise me that London will lose the £9 million. I have no doubt that when the Minister concludes the debate he will deal with this point.
There should be proposals in the Bill to introduce flexibility for London to raise revenue. London is a centre of attraction for enormous numbers of overseas visitors. Ten years ago the number was about 1 million a year; the number has climbed to nearly 8 million, and the forecast is that within 10 years it will approach 20 million. It is only right that this great heart of Britain, a world centre in many respects, a place with a system of Parliament that has been the forerunner of many other such systems throughout the world, should be the Mecca for visitors from abroad.
We in London welcome visitors, but we do not see why we, as ratepayers, should have to bear the burdens imposed by the benefits conferred upon tourists who wish to visit the city of modern civilisation. Therefore, we should like to see authorities like the GLC given the power to impose a tourist tax. That would be one way of raising the revenue necessary to deal with problems created by tourism.
One example is the desperate need of London's housing. Many sites in London which could be used for housing development are instead being acquired for hotel accommodation for tourists from abroad. This fact affects our ability to provide homes for Londoners. It is necessarly only to peep outside the Chamber at the traffic roaring round Parliament Square and the vast numbers of coaches carrying tourists during winter and summer, to see this Palace and Westminster Abbey. The cost of all this, both in frayed nerves for Londoners and in maintaining London's road system, is enormous.
On these grounds alone it is right that we should have an opportunity to recoup some of these vast extra costs from the people who create that burden for London. It has been calculated that if the GLC imposed a tourist tax at the rate of £100 per annum per hotel bed it would raise about £6 million a year. That would by no means even begin to meet the


extra costs involved but it would be a start in the use of locally-raised revenue to meet a particular local situation. It would go some little way to allowing the GLC to redress some of the anomalies that London ratepayers have to tolerate because of the unfair rating system upon which local revenue raising is based.
I shall vote against the Bill, in spite of those parts in it with which I agree such as the local ombudsman, because on behalf of the people of London we have a duty to register the most vigorous protest at the Government's failure to seize the opportunity to assist the hard-pressed ratepayers of this city.

8.0 p.m.

Mr. Sydney Chapman: I believe, as I am sure do many hon. Members on both sides of the House, that the rating system is illogical, unfair and out of date. It is illogical because families do not necessarily pay for the services that they use. It is unfair because people do not pay according to their means, except very roughly and very indirectly. It is out of date because about 60 per cent. of local authority revenue comes from the central Exchequer.
I fear that successive Governments have used the last point to reinforce the inadequacies of the first two—the unfairness and the illogicality. There have been changes, such as the domestic rate relief for those with low incomes, and I welcome the extra provisions being made to extend that. But the old adage is still as true today, that "Taxes are paid in sorrow and rates in anger". It is true also to say that taxes levied on the domestic hereditament are the taxes which cause most bitterness, not because of the amount that people pay but because the people who pay genuinely feel that others far better off do not pay the taxes at all. As long as that situation exists we must accept that the rating system is wrong.
I recognise—the point was touched upon by my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw)—that the rate call is pretty substantial. It is about £2,250 million. That was last year's figure, and that income is exceeded only by the revenue from income tax and, doubtless, the expected

yield from the new VAT. I was delighted to hear my right hon. and learned Friend, in his opening speech, admit what everybody knows—that the rating system is a regressive form of taxation. It was introduced at a time when the ownership of real estate was an outward and visible sign of wealth. That is no longer necessarily the case today.
However sophisticated the rating system, the fact remains that there are about 9 million wage and salary earners who do not pay the tax directly. That surely proves the point that the tax is unfair. Hon. Members have talked of the need to replace the rating system, but nobody has put forward a positive suggestion. I should like to sketch in one or two guidelines as to how the Government should act in replacing this tax as soon as practicable. First, it is well to remember that about half of the rate call comes from the tax on domestic hereditaments. Last year, in England and Wales, £1,200 million was raised on domestic rates. Therefore, the Government will have to consider how that £1,200 million—obviously more this year—will be replaced.
If it were to be replaced solely by income tax it would involve, by my calculations, an increase on the standard rate of about 7p in the pound. If it were replaced by a form of sales tax—say, a surcharge on VAT—it would mean the rate on VAT being increased from 10 per cent. to about 17 per cent.
Perhaps the logical and obvious answer is that the domestic rate system should be replaced by a combination of a surcharge on the standard rate of income tax—which would be a local income tax—of 2½p to 3p, or possibly 4p in the pound, the remainder being replaced by a surcharge on VAT, or a new form of sales tax on those items which are not at the moment taxed. I give one or two examples; I do not suggest that these should be used. If we were to increase tax by a penny a gallon of petrol it could raise another £57 million; if we were to tax a pint of beer by a penny more it would bring in £88 million; if we were to increase the tax on wines and spirits by 10 per cent. it would bring in about £50 million. If we were to restore the tax which in the last Budget was removed from such things as confectionery, sweets, potato


crisps and minerals—an action which doubtless delighted children but was greatly to the chagrin of dentists—it would yield £110 million. It should be a combination of these things.
The tax that replaces the domestic element in the rating system should be collected by the Inland Revenue or the Customs and Excise as appropriate. The greatest complaint about that is that people would say that it would not empower local authorities to raise the money themselves. My answer to that is that local authorities have precious little scope for doing that now. After all, the whole purpose of the rate support grant is to back up the poorer local authorities at the expense of the richer. It will not go unobserved by hon. Members that if the domestic element in the rating system is abolished some of the poorer local authorities will become relatively richer. Examples are the great industrial areas. In any case, the rate support grant is adjusted to take such matters into consideration.
A number of times during the last three years I have congratulated the Government on their great fiscal innovations—the promised introduction of the tax credit system, the replacing of the old purchase tax and selective employment tax by value added tax, and the unified system of income tax and surtax. I greatly hope that my right hon. and learned Friend and his colleagues will feel that, in time, they must move over to the replacement of at least the domestic part of the rating system.
That apart, and because the Government are not to do that now, obviously I welcome the Bill. I believe that my right hon. and learned Friend and his colleagues have tried to abolish some of the iniquities in the present system. I speak particularly of the large cities whose populations have been decanted into the suburbs and which have done badly out of the present method of calculating the rate support grant because of their consequent decrease in populations and involvement in such environmental activities as slum clearance.
I greatly welcome the institution of the local commissioner. I hope that my right hon. Friend the Minister for Local Government and Development will confirm that a member of the public will be

able to take a complaint against his local authority direct to his Member of Parliament, who will be able to put it before the local commissioner, rather than the individual having to do so through a local councillor.
I particularly welcome the increased help in domestic rate relief. I note that 3 million householders will be able to qualify for this instead of the existing 800,000.
I should like the domestic rating system to be abolished. If this cannot be done, then I welcome this Bill and give it my support.

8.13 p.m.

Mr. Arthur Blenkinsop: The hon. Member for Binning-ham, Handsworth (Mr. Sydney Chapman) is one of the few hon. Members who have attempted to propose alternatives to the present rating system. Everyone finds it easy to condemn the system as inequitable and unfair but it is much less easy to suggest alternatives that would be no less unfair in their incidence. Even the alternatives proposed by the hon. Gentleman would, on closer examination in detail, be seen to benefit the richer areas more than the poorer areas.
Any alternative proposals for raising revenue would be more sensibly based had we regional rather than the present local authority areas. Had we gone forward with proposals for a regionally elected body, which is what I believe we shall come to in the long term, it would have been much easier to think of alternative sources of revenue.
I share the sorrow and dissatisfaction that has been expressed with the inadequacy of the proposals in the Bill. Without going into the details, I shall seek to study the implications of the proposals with regard to the national parks and the countryside.
The Bill will replace specific grants that have been available up to now for the support of projects within national parks. First, under Clause 7 supplementary grants in respect of the county's estimated expenditure on national parks are to be met, to some extent at any rate, out of national funds. We welcome this provision so far as it goes, particularly if our understanding is correct that it is meant, in future, to cover the administrative expenses of the separate national parks that have not in the past been so covered.
Everything will depend upon the size of the supplementary grants. Many of us fear, particularly because of the rumours of cut-back in local Government expenditure, that we shall face not new revenues but a reduction of the miserably small amounts that have so far been available to national parks. We should welcome an indication from the Minister that it is intended that the national parks will be able effectively to develop their own administration. In this area, relatively small sums can produce tangible and valuable results. We hope that the national parks will not be afflicted by the overall cutting back on local Government expenditure which may ensue in other respects.
I hope that before we go into Committee we shall be told what proportion of the expenditure is likely to be met from central funds.
Clause 9 contains a new provision which I welcome in its broad intent, under which the Countryside Commission will have funds for certain expenditure within and outside national parks—for example, for projects such as country park provision. Long-distance footpaths may be covered. As for many years I have urged that there should be such independent provision for the Countryside Commission I shall be the last to criticise it when it is conceded. Whether this will be valuable depends entirely on what scale of provision is intended. Will this really have any useful contribution? When I intervened earlier, I was glad to have the Minister's assurance that it was not merely a cosmetic but was meant to make a valuable contribution towards national park work. More detailed assurances, and an indication of the way in which this provision will operate, will be most valuable when we consider the Bill in Committee.
A number of my hon. Friends are concerned about the implications of some of the other provisions of the Bill, particularly those in Schedule 6, which appear to do away with the default powers which the Minister has had in the past for use when national park authorities—local authorities in this case—have not carried out certain work. There was a provision, whether used or not, which enabled the Minister to act in matters regarding access land, provision of long-distance and other footpaths, and many other valuable and

useful provisions. The fact that the power existed was of real value. Now this power is being swept away, and I wonder whether that is right.
I understand that the Minister's intention is to ensure that local authorities should have the widest independent power in this matter, but we are concerned here largely with national parks, the very name of which makes clear that they are not local, although some local interest is involved. They are areas of such special significance that we have insisted that they should have special national provision and, therefore, the Minister's default powers should, in all probability, be retained. These matters will be considered in Committee. Many matters are involved, on which it would be valuable if the Minister could make detailed explanations before the Committee stage.
Many hon. Members, including some of my hon. Friends, have indicated that they fear that if even further central funds are to be made available for local government work, local government will become the servile creature of central Government. I do not believe that for a minute. We have to accept the need for further central Government provision, particularly in education. I do not believe that it means that local authorities will lose any of their independence.

8.19 p.m.

Mr. Timothy Raison: I cannot match the expertise of the hon. Member for South Shields (Mr. Blenkinsop) in the subject on which he has concentrated, and so I shall not speak on the same matters. Hon. Members know that he speaks with a unique authority on them, and it would be impertinent of me to try to do so.
It has been suggested a number of times that there is a need for a big new inquiry by a Royal Commission into the way in which local government should be financed. I understand why people have suggested it, for genuine reasons, but I suspect that by now we have reached a stage when we roughly know what the options are and we lack either the courage to plump for one or other or a certainty that the new schemes are better than the existing scheme, however fallible it is. The issue is one of political decision and courage rather than the need for a


great deal more research and examination.
My hon. Friend the Member for Birmingham, Handsworth (Mr. Sydney Chapman) probably hit the nail on the head when he said that if we are worried, as we are bound to be, by the increasing burden that rates impose, and by the fact that rates are a regressive tax which falls more heavily on some than on others, the right and easy answer—easy answers are not always wrong—is to increase the proportion of local expenditure paid for by central Government and raised through the ordinary tax system. We may argue about whether the money should be raised through direct taxation, expenditure taxes or anything else, but the possibilities exist. Rather than embark on a reform about which nobody on the evidence of today's debate, has particular confidence, we should be prepared to consider saying that over the years a higher proportion of local government expenditure will almost inevitably come from central Government sources.
I want to refer briefly to the rate support grant system as it is set out in the first part of the Bill, in particular in Clause 2, and in Clause 3, which describes the procedure for implementing the proposed system through rate support grant orders. The Bill maintains something that has been a feature of local government finance for some time, in that there will continue to be the needs element, the domestic element and the resources element. People may grumble about the way in which local taxation works now, but I do not think there has been serious criticism of the existence of those three elements. The issue is not so much whether they should exist as what the balance between them in the total scheme of rate support should be.
I preface what I have to say about Buckinghamshire by saying that I do not quarrel with the idea that as a nation we need to allocate a higher proportion of our national resources to the hard-pressed inner city areas and the other areas of urban stress. I took part in the debate on the Gracious Speech and spoke on the day allocated to discussion of the problem of urban stress, when I said that it was a matter of major national priority. I am sure that that is so. If, however, we are to have a rating system that is seen

to be fair and generally acceptable, it is vital that when the Secretary of State makes the orders which he will be empowered to make under Clause 3 he should pay close attention to particular cases of hardship and anomalies.
The Secretary of State should also accept a principle that has been challenged recently: that while declining areas certainly need extra help—I do not dispute that—so also do growing areas. There seems to be a disposition to say that areas where the population is increasing rapidly should be left to a greater extent to look after themselves and should not qualify for extra provision to help them through. There is manifest nonsense about that. When an area's population is growing rapidly, it is necessary at certain points to over-provide to allow scope for the increasing growth, and everything starts from scratch. By and large, the area does not have the existing plant to work with but must create new plant, new schools and so on. Therefore, there is a strong case for not forgetting the growing areas in our concern about the declining areas.
I was encouraged that my right hon. and learned Friend the Secretary of State implied in his speech that when the orders are made under Clause 3, defining the way in which the rate support grant is to operate, the domestic element will receive some form of additional support, and that domestic ratepayers will not suffer under the new dispensation. I hope that when he replies my right hon. Friend the Minister will be able, first, to confirm that that was what the Secretary of State said and, secondly, to elucidate the matter a little further. This issue is causing the gravest concern in my constituency and in the county of Buckingham, and I hope to show that that concern has a good deal of justification.
It is difficult to argue one's case in great detail when working only on hypotheses, but we have a certain amount of evidence of what has until recently apparently been envisaged as the sort of allocation that we might expect when the new rate support grant is set out under Clause 3. A grants working group has been working for the Department of the Environment—I am not sure whether it is part of the Department or whether it has simply been convened by the Department—and has made proposals about how the rate


support grant might be allocated between the three ingredients which make it up.
It appears that the line of thinking is that the needs element in the rate support grant, which is overwhelmingly the largest element, would tend to fall and that the resources element would rise very substantially. There is broad sense in this, the point being that the resources of the inner city areas tend to be flimsy and weak compared with other parts of the country and that, if we are trying to operate a system of giving greater strength to the inner city areas, it is right that the resources element should increase. That is a plausible line of approach.
Incidentally, if the thinking of the working group reflects official opinion, those Labour Members who have argued that the Bill does nothing for the inner cities are not being fair. I agree that we cannot tell until we have seen how the rate support grant is worked out, but to say that the Bill is not capable of being of use to the inner city areas is unfair.
The working group recommended that the resources element should more than double—in other words, that it should increase from 13·3 per cent. to 27½ per cent., which is a substantial increase. Taking the impact of this in Buckinghamshire and, for convenience, changing the 27½ per cent. to 25 per cent., it means that the county as a whole would suffer a loss of 14·3 per cent. of its current grant, which is equivalent to £3·2 million, or a 4½p rate. That is a substantial burden to carry.
But Buckinghamshire is threatened not only with that burden but by the fact that it is losing its southernmost part, particularly the town of Slough. Slough arouses a certain amount of controversy. If I were John Betjeman, I suppose I would continue the verse which he wrote some years ago and would say "Good riddance to Slough". The House will recall that he wrote a poem which read
Come, friendly bombs, and fall on Slough".
However, he was not, I think, a ratepayer and would not be affected in the way in which ratepayers in the rest of Buckinghamshire will be affected.
Slough, as a booming industrial town, contributes very substantially to the resources of Buckinghamshire. The effect of losing Slough will be to reduce the

rateable value of the county by 24 per cent. but the population by only 18 per cent. In other words, by losing Slough all Buckinghamshire will be left substantially worse off. The effect of that is held to be equivalent to requiring a 10 per cent. increase to offset it, or a 3p rate. This, on top of other hardship which we face, adds up to a very substantial increase indeed in the rate burden that is likely to face the county.
I think I am right in saying that only a handful of other counties face a similar problem, due to loss of a substantial part of their existing territory. As I recall it, the other counties are Somerset, Warwickshire and Northumberland. These counties, together with Buckinghamshire, have a very special claim to sympathetic consideration from my right hon. Friend when the rate support grant system is put forward. The two factors which I have mentioned add up to something like a 25 per cent. increase in the county rate, regardless of the increases that have to take place in order to cope with rising costs and so on.
It must also be remembered that the system does far too little to take account of growing population, because the position in Buckinghamshire is that on the one hand we are losing the industrial riches of Slough but on the other hand we are seeing the growth of Milton Keynes new town. It is quite true that, in the fullness of time, Milton Keynes new town will add very positively to the wealth of the county and will no doubt make an enormous improvement to our situation. It is equally true, however, that at the present stage Milton Keynes has to be paid for and does not have to pay for itself.
In other words, we have a very heavy additional burden in developing this huge new town, and this falls fair and square on the ratepayers of Buckinghamshire. The county rate is already 28·9p, which is the tenth highest in the country, and there is no doubt that Buckinghamshire could soar to the top of the league. A sudden increase on people who already consider themselves to be very highly rated would produce a very heavy burden indeed and would make it very difficult to develop the schools, the nursery schools and so on that we all hope to see growing up in the county.
I would say to my right hon. Friend, first, that there is a very strong case indeed for special consideration for the four counties I have mentioned which will lose because of reduced size. Secondly, I hope that my right hon. Friend will be able to reconsider the apparent reluctance to help the growing areas. I do not at all dispute the need to help the declining areas, but I hope that the growing areas can also be helped. Thirdly—this is perhaps the most important point—I hope that my right hon. Friend will agree that, so far as possible, the special positive discrimination programmes which I am sure are absolutely vital to help the really hard-hit areas should not come out of the normal rate support grant apparatus. I believe that the money must come out of central government funds.
Of course all rate support grant comes out of central Government funds and therefore, in a sense, it is a question of one or the other, but we need to set up a fuller system for defining priority areas and we have to allocate a separate amount of Exchequer funds to help them. That is of very great importance. If we believe that we can help the hard-hit urban areas by, as it were, soaking some of the other local authorities, we shall run into trouble, and I do not believe that being fair, or more than fair, to one group requires that we should be less than fair to another group.
Finally—I shall be grateful if my right hon. Friend can reply to this point tonight—I hope that it will be possible to debate in its draft form rather than in its final form the order which will arise under Clause 3. As we all know, when an order comes before this House it comes in a take-it-or-leave-it form. There is no possibility of going into detail about it. It may be held that I have been slightly out of order already by talking in detail about the contents of an order which is yet to come rather than about the Bill. I have done so because there is a risk that this is the only opportunity that I shall have to make these points. In the end we shall simply have an order and we shall have to take it or leave it. We shall take it, of course, and I fear that my constituents may be grievously harmed by our doing so.
I beg my right hon. and hon. Friends to realise that the problem facing our county is not just that of the normal squeals of people who do not like seeing their rates increased. It is of an altogether different order of magnitude, and I hope that we shall have an immediate and sympathetic response to it.

8.35 p.m.

Mr. Caerwyn E. Roderick: I begin by quoting an extract from a speech of mine in the Welsh Grand Committee in July 1971 during a debate on the reform of local government in Wales. I said:
I criticise the right hon. and learned Gentleman further for not awaiting publication of the Green Paper on the financing of local authorities. The Secretary of State said earlier that the proposals on functions and boundaries could be published separately. … What local authority can make proper recommendations until it has seen how the financial structure will work out?"—[OFFICIAL REPORT, Welsh Grand Committee, 13th July 1971; c. 58.]
That was the start of the debate on local government. Now we come to the final stage where at last the money is to be discussed.
The Green Paper indicated several possibilities which could have produced income for local government. I have always believed that a system dependent entirely on the rating of property was an anachronism from the past. There is an element of ownership of property which indicates ability to pay, but that is not necessarily true. I have looked forward to seeing some form of local income tax. We have to keep an element of property rating for the sake of industry and perhaps to try to combat the empty property nonsense which is going on at present. On top of this we have the new rating valuation which has derated industry, thereby throwing a greater burden on domestic ratepayers, and the evidence shows that council houses and the smaller private houses have had proportionately high increases.
In the Opposition amendment the phrase appears
which provides insufficient financial provision for local authorities … to meet the need for essential services".
The Bill also provides insufficient information. Member after Member has asked for more detailed information about the figures. The Secretary of State


talked about producing a White Paper later. Has not the right hon. and learned Gentleman realised that all this legislation is to be passed before next April and that the local authorities are to be fully operative and working on the figures by then? What hope have county treasurers?
We refer in the Opposition amendment to the increased costs of administration brought about by local government reorganisation. The cut in public expenditure means that local authorities cannot even get a Government loan to purchase premises in which to operate. The Government said "You will be reorganised, and now it is up to you to get yourselves set up financially." My local authorities have been refused aid to purchase an administrative centre. What hope have they of carrying on their work?
There is some merit in the amendment tabled by a number of Government backbenchers. Far more discussion is needed to switch a proportion from local to national funds where charges are clearly national. I understand that there is to be a switch of resources from rural areas to urban areas. The urban areas need more help, but surely that help should not come at the expense of the rural areas. It should be provided by more assistance from central Government funds. Additional money should be pumped into carrying out the urban aid programme. It cannot be done by a redistribution of existing funds.
My hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) spoke about the possibility of a tourist tax for London, and a Government supporter shouted that tourists spend money. We sometimes think that we keep Mid-Wales ticking over for the sake of the tourist. Men cannot live by tourism alone. We would need a tourist tax in Mid-Wales also.
Instead of getting extra funds, we shall suffer under the Bill. The county of Powys, part of which I represent, did not ask to be created. By far the larger proportion of the population objected to such a system of government. The three counties concerned objected strongly. The sprawling county of Powys, which is 100 miles long and has a population of 199,000, has suffered daylight robbery

at the hands of the Government. It lost 16 per cent. of its property and 16 per cent. of its rateable value. Its richest part, an area of 2 per cent. of the whole, was hived off.
The hon. Member for Aylesbury (Mr. Raison) referred to some English counties which suffered a similar fate but he forgot to mention Powys. There was bitter opposition from people living in the areas which were removed from the county and in the areas remaining in the county, but all to no avail. The Welsh Office was determined to carry out the job.
Conciliatory noises were made about the financial plight of such a weak county. Ministers said the position would have to be considered and that safeguards would be produced. We now understand that, not content with forcing a structure on an unwilling population, the Department of the Environment proposes to lop off rate support to the extent that the ratepayers of the area will have to find 60 to 70 per cent. more through local rates. That seems to be a record figure in all the tables which have been published. No other county approaches it.
Our reason for believing that we shall suffer to such an extent is that in the resources element grant we find that sparcity weighting is missing. The grant was founded on a population per square mile basis. It ensured extra help for areas with large populations. I hope that the Minister will say where the compensatory help is to come from. To have maintained the present scheme would have been of minimal cost nationally. Locally the new scheme will prove disastrous. The main reason is the withdrawal of the sparcity element which I have mentioned. Transitional arrangements have been mentioned, but they will deal only partly with the problem and only in the short term.
Other counties are adversely affected by the proposals, but in no county are the proposals as relatively detrimental as in Powys. That is presumably because of the low population density in the county. There are already severe penalties imposed on those who live in the rural parts of Mid-Wales without adding to them. Such areas have been battling with the problem of depopulation. By having their burden increased they cannot


hope to arrest the declining population. The position of officials and councillors in the area will be impossible. They are already in despair. There is already a loss of confidence and respect by Ministers and civil servants.
The Secretary of State for the Environment said that the statutory deductions in the gross value to arrive at a rateable value were to be increased. Are they to be increased proportionately? We have little information in the Bill about this. Are they to be increased more than in proportion to the increase in the gross values?
The right hon. and learned Gentleman mentioned transport. We would like to see more help for transport, but no assurance has been received. We shall want to look more closely at the level of expenditure which we can expect. I hope that we get more information in Committee.
My hon. Friend the Member for South Shields (Mr. Blenkinsop) dealt with national parks fairly fully. In Powys there is a fairly substantial national park. I reiterate one point which my hon. Friend made. It is all very well talking about funds, but what we are concerned with is how much. That is the important question. How much will there be to spend?
The Secretary of State said that he would extend the rate rebate scheme so that the domestic ratepayer who is in receipt of supplementary benefit will be included. But surely not all those in receipt of supplementary benefit will be covered. Their rates are not covered. How many of those on supplementary benefit will have their rates paid for them? We are told that 3 million domestic ratepayers will receive help in the form of rebates. With all this rebating and supplementing, it would surely have been simpler to have started with an income-related local tax.
I welcome the establishment of local government commissioners. The right hon. and learned Gentleman said that this structure would be paid for and run by local government. I hope that clearly-defined areas of operation will be laid down and that local government will be required to carry out its duties.
May I once again draw the attention of the Minister to Powys? Will he take another look at it? If he does not, we fear that we will face the danger of a breakdown in local government.

8.45 p.m.

Mr. Arthur Jones: We have all been impressed by the figures that the hon. Member for Brecon and Radnor (Mr. Roderick) gave in quoting an increase in the rate demand of between 60 per cent. and 70 per cent. To some extent this reflects the feeling of uncertainty that I have about the proposals in the Bill and the effect they will have on local authorities. Most local authority treasurers are looking into the circumstances as they affect them, but they do not have the essential ingredient, namely the rate support grant regulation, which will set out the matter in positive terms. I share the hope of the hon. Gentleman that special arrangements will be made for someone who in this change is faced with the situation that the hon. Member outlined.

Mr. Roderick: I was quoting from figures published by the Department's Grants Working Group.

Mr. Jones: That adds more power to the hon. Member's argument. The debate has reflected the concern felt about local government finance generally and the uncertainties that are bound to be present for some weeks yet. It cannot be much longer before the Government come forward with their rate support grant proposals. I share the view of the hon. Member for South Shields (Mr. Blenkinsop) that the increasing amount of local government expenditure found by central Government does not have the effect of significantly decreasing the independence of local government.
If we look back over the past three years we see that during the current year the central Exchequer provided 60 per cent. of the total local government expenditure, in the previous year it was 58 per cent. and in 1971–72 it was 57·5 per cent. We shall inevitably see a rising proportion of local government expenditure met from central funds.

Mr. Ronald Brown: The hon. Member is quoting figures for the country as a whole. In London it is and has been only 40 per cent.

Mr. Jones: I am not dealing specifically with the London area. The hon. Member for Erith and Crayford (Mr. Wellbeloved) dealt most effectively with that earlier. I recognise that London does not have the additional difficult ingredient of reform, having been reformed some years ago.
I entirely support the extension of the rate rebate arrangements. I was interested to learn from the Secretary of State's speech that this will be enlarged from 800,000 ratepayers to a total of about 3 million. This demonstrates beyond question the whole basis of the present rating system. What we work from is the ability to pay, represented by ownership or occupation of property. When the bottom falls out of that argument it throws into question the whole basis of our present rating system. We have had great expectations, for good reasons, which have exceeded what has materialised.
The 1971 Green Paper, "The Future Shape of Local Government Finance" promised that
… the right financial framework will be one in which central and local government can act as partners in promoting the welfare of the citizen, each exercising its proper reponsibilities with the minimum of overlap and potential conflict.
Paragraph 4 of the consultation paper, issued in June, referred to the Government's proposals, which had the intention of achieving two principal objectives. Many of us hoped that the Government's policies would be based on that document, but unfortunately that has not proved to be the case in the provisions of the Bill. Paragraph 4 of the consultation paper said that the objectives were
to share the cost of local services, fairly, both among individual local inhabitants having regard to their relative ability to pay and also between the general taxpayers and the local ratepayers. The second objective is to ensure, as far as possible, that decisions affecting local services will be taken locally.
I appreciate that in the Bill the Government have made every endeavour to meet these objectives, but that cannot properly be done without the root-and-branch reform of local government finance. I recognise that the time is not opportune for such a reform; indeed, it is out of the question. Therefore, in my view the Government are doing what lies in their power to rectify the shortcomings of the present arrangements and provide

for additional and special facilities where these are clearly necessary.
The services administered by local authorities are to a great extent determined by central Government. This is the difficulty from the point of view of local government. Reference has already been made to the tremendous demand for educational services, which takes up two-thirds of the average rate precept. Local authorities are caught between the millstones of increasing and widening demands both by the public and central Government for increasing services on the one hand and inadequacy of resources on the other. This is the burden of the the widespread complaints that one hears from members and officers in local government. The widely held view is that the financial arrangements of local government should have been looked at comprehensively. There is clearly no alternative but to leave the question for some years until the effects of reorganisation provide a clearer picture.
My right hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), the Chief Secretary to the Treasury, speaking at the last annual conference of the Association of Municipal Corporations was reported as saying,
It may well be that, in a few years' time, when the recently enacted tax reforms have settled down, the then Government will find it possible to graft on to the national tax structure some new form of local taxation.
The burden of many speeches today, from both sides of the House, has been that we shall need to look for a significant reform of the tax structure in national rather than local terms.
In the context of this delay and the unwillingness of the Department of the Environment and the Treasury to implement substantial reforms, we are inevitably faced with the propping-up arrangements contained in the Bill. Again, they do not provide any clear division of responsibility between central and local government.
The concern among professionals in the treasuries of local government is reflected in a statement by the Institute of Municipal Treasurers and Accountants, quoted in the August issue of Local Government Finance:
… but to be faced with so many further imponderables almost makes a mockery of democratic local government and the so-called


partnership between central and local government.
That is a reflection of the dilemma facing many hon. Members who are concerned for the independence of local government and the widespread responsibilities of elected Members.
The terms of the Bill are a reflection of these circumstances, and one cannot be other than sympathetic for those who are faced with the problem of administering a cumbersome, outdated and essentially inequitable system. I feel sorry for those in local government and, though perhaps I ought not to say so, for the Secretary of State and Ministers who have not, I think, achieved the purposes that they and many of us hoped. I know that the timetable is difficult and tight, but it ought to have been possible to look at this subject in the early days of this Parliament. I agree with my hon. Friend the Member for Aylesbury (Mr. Raison) that we surely had all the facts, and it was only a question of political will and decision taking to enable the reform of local government finance to be introduced coincident with reform generally.
I welcome the extension of domestic relief. This will put the accent more properly where it should be, it having been lost over years past—namely, making the responsibility for payment rest more lightly on those with inadequate means. For this reason I should have supported some form of differential rating which would have placed the burden more clearly on industrial and commercial properties and removed it from the domestic sector. I think that the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) holds that view. We are doing it the other way. We are derating the domestic element, and the inquiry into and assessment of means that that involves is unfortunate. I suggest that it would have been simpler and less of an imposition upon ratepayers to have had the other system of super-rating—I think that was the phrase used earlier—for other than residential hereditaments. But we must do the best we can with the tools that are to hand. In the circumstances, the Government have made the best use of the rating system that we have with the adjustments that are proposed in the Bill. For that reason, I welcome it.
It will be interesting to see what recommendations are forthcoming when we approach rate support grant considerations. Here again, I support my hon. Friend the Member for Aylesbury in making a plea for a chance to look at any such recommendations prior to them being presented in definitive terms to be dealt with on a "yea" or "nay" basis.
We shall clearly have to prop up the existing rating system for a number of years, and it will be increasingly difficult. We shall still have our debates on the rate support grant clouded by a whole series of imponderables. I well recall the hon. Member for Small Heath, in the Labour Government, trying to deal with it and confessing that it was a subject with which he found it difficult to cope. That is what everybody finds who has to contend with it. It is full of complications and, for those of us who see the end result, a tremendous amount of unpredictability. For this reason, I welcome the suggestion that we should have a chance to consider the matter this year. I hope that reasons will not be found to deny us that opportunity. I should think them inadequate in any event. I hope that that suggestion, which I warmly support, will be favourably received by my right hon. Friend.
This has been a difficult debate—a debate on rates invariably is difficult—and many of us who are seriously involved in the subject look forward to an interesting Committee stage.

9.0 p.m.

Mr. Michael Cocks (Bristol, South): This wretched Bill confirms what we suspected when the Minister spoke on 20th March. It is "business as usual". It is simply a tarted-up version of the old system. In the three years that I have been a Member of this House, the most consistent complaint has been about the rating system. It is a nightmare for the elderly, the injustice of it is universally recognised, and yet nothing has been done about it.
The Secretary of State said that the new authorities would want to provide a high standard of service from the beginning. When the Minister opened some offices there, he described the new county of Avon, which has been created by the Government, as a bonny bouncing baby. The Minister departed and the Bristol ratepayers have been left holding the


baby, because the county baby has continued to grow and create a new structure.
There are stories of substantial salary increases being paid to people for doing the same work, or at times less work. There is gross over-staffing. The chief officers seem to be settling down, but the rest of the staff are in a ferment and we are unable to get to grips with the situation because the Pay Board is out of our ken and we cannot question it through the normal channels of the House.
As the Government have created this new structure, I should like to know what extra grant they will make to Bristol to enable it to cope with this administrative burden. It is presenting a serious problem which will mean that the new county, which the Minister did so much to create, will be handicapped from the start. We are afraid that Bristol ratepayers will be held back while other areas to the north and south are brought forward.
I welcome the extension of the rebate scheme, but what will be done to make sure that there is complete take-up? Unfortunately it is often those who are least able to cope who do not know about a scheme.
I shall leave to the Committee stage other points that I wish to make. I welcome the setting up of the local government ombudsmen. I congratulate the Government in this case for not knocking Bristol but, instead, following its lead. The Bristol district council's Labour group adopted this as its policy before the election, and I am sure that the Minister would like to know that in this instance he is at one with the council. This is an important safeguard, but the Bill as a whole will be severely mauled in Committee because it is a poor thing after all these years of labour.

9.3 p.m.

Mr. Gordon Oakes: As the hon. Member for Northants, South (Mr. Arthur Jones) said, this has been an interesting and thoughtful debate. I think the hon. Gentleman will agree that the theme of the speeches from the Opposition benches and most of those from the Government benches, has been that local government is being starved of resources for its essential needs and that the Bill

does hardly a thing to help relieve that serious situation. That is the theme of the reasoned amendment which my hon. Friends and I have put down, just as it is the theme of the reasoned amendment put down by hon. Gentlemen opposite.
The hon. Member for Ripon (Mr. Austick) said that much of the dissatisfaction with national government stems from a dissatisfaction with local government. I think that it is the other way round. Much of the dissatisfaction with local government is because the national Government, either by rates or by rate support, do not give sufficient money for local government needs. Consequently, the majority of complaints against local government arise because of lack of resources.
With the honourable exception of the hon. Member for Ripon, who has been present throughout the debate, I find it somewhat remarkable that the Liberal Party, which prides itself on community politics—on mending pavements, and so on—has not attended the debate in much more force, for the debate concerns the wherewithal for the resources of local government.

Mr. Austick: Does the hon. Gentleman agree that throughout the debate at least 10 per cent. of my party has been in the Chamber?

Mr. Oakes: A much greater percentage than 10 per cent. of the Liberal Party's discussion at elections is about local affairs. One would have thought that it would have been represented more forcibly in the House today.
The first major criticism of the Bill, as my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) said, must be the timing. It is too late. The Bill ought to have been in existence, or there ought to have been full discussion of its terms, either before or when we discussed local government reorganisation two years ago. It is a nonsense to produce a Bill dealing with finance, the bedrock of local government, not at the time, not even one year later, but two years after local government reorganisation was discussed. Furthermore, the Bill has come at such a time that hon. Members on both sides of the House are at a disadvantage, in that if they want to discuss its provisions in


detail they will be hindering local government, which they are trying to help, because they will be delaying the implementation of the Bill. It is not good enough that the Bill should have come so late.
The second major criticism, expressed most forcibly by my hon. Friend the Member for Small Heath and reinforced by the views of all the local government associations, is that the Bill does nothing to provide for alternative sources of local government finance. There may well be reasons for rejecting local income tax or local petrol tax, but they have not been adequately given. A Green Paper was produced and discussions were proposed. The local government authorities supplied answers and views, but very little has come from the Government, either in the House today or previously, to explain why they reject many of the alternative sources of income suggested by local government. Why, for example, is there nothing in the Bill about capital values, as distinct from the old, outdated, anachronistic rental values, which are the basis of rates? It was said in the Green Paper that this was a very fruitful and fertile avenue of discussion of a future system of rating.
It may be that at present the Secretary of State does not want to introduce new taxes, as he has said. We are in difficulties, because we are in phase 3, and the right hon. and learned Gentleman does not want to encourage inflationary expenditure. But in a long-term Bill that is no answer to the question why an enabling clause was not inserted so that in the future the question of capital values could be considered.
As my hon. Friend the Member for Small Heath has said, the Bill is not part of phase 3. It is a long-term Bill, dealing with local government finance, probably for decades to come—unless the Labour Party, as I hope it will, returns to power, sets up a Royal Commission and accepts its findings on a totally new basis of local government finance in the future.
Not only does the Bill not tackle major sources of finance; it does not even tackle the major inconsistencies in local government rating today. There has been discussion about the rerating of agricultural holdings. I echo what was said

by my hon. Friend the Member for Small Heath. In a Bill of this nature there ought to be much more detailed examination of this question. There ought to be discussion, not necessarily about re-rating the lot, blanket fashion, or that at present the lot should be derated blanket fashion.
I understand the points made by my hon. Friend the Member for Cardigan (Mr. Elystan Morgan). No doubt he was thinking of some of the hill farms in Wales. But because a poor agricultural hereditament is derated, does it follow that a very rich agricultural heriditament should be equally derated? I think that it was the hon. Member or Devizes (Mr. Charles Morrison) who said that this was a question of adding to food costs. That was not the view of the Government when they produced the Green Paper a short time ago. The Green Paper on rating of agriculture, on page 28, at paragraph 2.79, begins by saying that the matter deserves consideration and that the Royal Commission on Local Government in England described derating of agriculture as an anomaly which should be removed. The Government then go on to say
Certainly this is the one substantial class of property that is still exempt from rates. The exemption was originally granted when agriculture was a depressed industry, and circumstances now are very different. Arguments can be adduced both for and against derating.
They go on, with nothing said about food prices,
But, although there would be no technical problem in valuing agricultural land and buildings for rating, it would impose a substantial task of valuation on scarce professional staff—who could not cope simultaneously with the introduction of capital values for dwellings—and could probably not be completed before the 1980s.
That is why, the Government concluded, they could not deal with agriculture. They did not have the professional staff to deal with that and capital values. But in the Bill the Government are dealing neither with the derating of agriculture nor capital values. The argument about professional staff shortages therefore goes by the board. But because of the poverty of many rural areas this matter should be looked at. The system of blanket derating is of little help to the farming community. It does a great disservice to rural areas and a general


disservice to local government generally. In the rural areas it takes up the resources grant and it diminishes the amount of grant available nationally for other authorities. This matter should be looked at, particularly in the light of the Government's views in the Green Paper.
Similarly, why does the Bill do nothing to alter the archaic way in which we extract much-needed revenue from Crown properties? Local authorities have no rights of appeal against the diktat of the Treasury. The Treasury decides what contribution a certain Crown property hereditament shall make, and a local authority has to abide by that diktat. This is the sort of Bill in which we should be considering the rating of hereditaments that belong to the Crown.
Perhaps I may introduce a personal note here, because a number of parishes in my constituency are particularly affected by National Coal Board and Post Office property, and so on. Under the present system, although the rural district and the future district may benefit from a contribution, the parish council benefits little or not at all. Other parishes containing ordinary industrial hereditaments—one in my constituency contains the Halewood Ford Works—benefit considerably on a rateable value basis. This, too, should be considered at parish level in the Bill.
A great deal of interest is being revived in parish councils. They were one form of local authority in the Local Government Act which were expanded rather than contracted. Again, why is there nothing in the Bill to increase the penalty on empty properties, providing for them not only to be rated but to be super-rated? There is a great need in housing, and certainly in some office development, for local authorities to penalise landlords who deliberately keep their properties empty. There must be some flexibility. I know that there are difficulties. Sometimes the property is empty, and because it is empty it is almost impossible to trace the owner.
I agree with the selectivity that the Government have provided in this Clause. I do not agree with the level of the amount, because the Harry Hyamses of this world who are still making an enormous capital increase, day by day and week by week, will not

be deterred by rates alone. By super-rates they might be deterred, and at least the community would be getting some of the benefit from the empty property, which at the moment is going purely into the pockets of speculators.
The hon. Member for Northants, South mentioned the super-rating of industry. As we are shortly to have the Environmental Protection Bill, to which I look forward—as I know the hon. Gentleman does—I had hoped to see more positive provisions in this Bill, for example for the super-rating of pollution-producing industries—a pollution premium, for example, which would provide not only extra resources for the local authority, which so often must clean up the mess, but a strong incentive to industry itself to tackle the job of eradicating the pollution. Making the polluter pay is a fruitful and fertile idea, which could have been dealt with, but not a word of such a novel idea finds its way between the covers of this pedestrian Bill.
Although I welcome the specific grant of 90 per cent. towards student grants—in view of the desperate plight of many young students today, the key question, as I am sure my hon. Friends at least will agree, is: 90 per cent. of what?—nevertheless, there is considerable force in the argument that this should be a 100 per cent. grant to local authorities, because the recipient of the degree or of the other award at higher education level rarely, if ever, returns to the local authority concerned. This is a national question. Let us have equal grants throughout the country and decent grants for our students provided 100 per cent. by the Government.
That leads to the much bigger argument that hon. Members on the Government benches have advanced—the question of teachers' salaries, which are laid down nationally in any case but are a very considerable burden on the rates, and which could be considered as a transfer from local government finance to national Government finance without any loss of individual discretion and determination by local authorities. They could not lose their individual determination, because teachers' salaries are laid down nationally. It is a great pity that when the Government were considering the question of student grants


they did not consider at the same time putting on to a national basis the funding of teachers' salaries.
I want to look briefly at some of the other faults in the Bill, which I hope we shall be able to rectify in Committee. As hon. Members have said, the Bill does little or nothing for the large cities and conurbations. The formula is likely to be the mixture as before. That mixture as before is leading to the bleeding to death of many of the large conurbations. Indeed, Clause 2(4) denies to metropolitan districts a needs grant if the metropolitan county as a whole is above the national average. This will surely lead to monstrous inequalities. It will lead to inequalities in London, for a start.
I refer the Minister for Local Government and Development to our own area. It is a classic example. Merseyside metropolitan county consists of such widely disparate districts as Southport, which is well-heeled, parts of his own authority, which is well-heeled, the Wirral, and Bebington. It also contains the city of Liverpool, which is in a desperate plight, and St. Helens, which has old and derelict property. It also contains Knowsley—a brand-new authority, vibrant with people entering it.
Are we to say that, if the national average is exceeded by Merseyside county as a whole, St. Helens and Knowsley will be deprived of the needs grant because they happen to be within that metropolitan county, despite their needs? That is precisely what Clause 2(4) states. In Committee we shall seek to remove that provision from the Bill.
Allied to that is what was said by two Conservative Members, the hon. Member for Essex, South-East (Sir Bernard Braine) and the hon. Member for Aylesbury (Mr. Raison), in two interesting speeches supporting a point put forcibly to me by my hon. Friend the Member for Hitchin (Mrs. Shirley Williams), who has also had correspondence addressed to her from the area in question. The Bill appears to take away from the outer metropolitan areas the outer metropolitan rate benefit they now receive. There is considerable population change in their areas, with young people coming in and new towns being created. As well as population,

child population and so on, the formula should include an element for change by an authority either losing or rapidly gaining population.
The factor of time is not considered in the equation and yet it is vital in regard to the resources of a metropolitan district or non-metropolitan district, as I know very well from the situation in Knowsley, where there is an explosively expanding population with people coming in. Consequently the change creates a tremendous financial burden on the local authority, and it should be considered in the formula.
Clause 16 refers to the order that the Secretary of State must lay within the next six weeks if he is to lay it, which can put right the anomaly of gross and net rateable values created at the last revaluation. I asked the right hon. and learned Gentleman why the order had not already been made and he gave an explanation, though it was not adequate.
The Government mismanaged the situation when revaluation took place. There is a narrowing between the net and gross rateable value the higher the gross rateable value goes—reasonably so, because the difference between net and gross is based on the repairs allowance and so on for the owner, which would naturally narrow according to the rateable value of the property. What the Government forgot when they revalued all properties, multiplying the value two and a half, was that they were narrowing by that much the gap between net and gross rateable value. That matter should have been put right at the time, but it has still not been corrected.
It looks as though the Government now intend to do something about the matter. It was not on for the Prime Minister to tell local authorities at the time that their rates should go up by a precise multiple of two and a half when there had been that omission in the formula of the difference between the net and gross rateable values.
I regret that there is nothing in the Bill to deal with the valuation of council houses. Their rates were raised considerably in proportion to those of other properties at the time of revaluation. I do not charge the Government with responsibility for that. Even if they had done it, at least it would have been a


democratic decision. What I regret is that it was done at the whim of the Inland Revenue, of the valuation officers who decided to increase the rates of council property.
In a Bill of this nature there should be some democratic control, either at local level or at Government level, of major policy decisions. Council house tenants throughout the country are feeling the effects of a decision made not in the House or even by a Minister or by local government, but by civil servants, namely the Inland Revenue.
The water charge is a new creature. I heard of it only last week. Two points arise from it. First, why does not the water charge, or sewerage charge, which must be put separately on the face of the rate—and it will be quite a burden on local authorities to make out a separate rate for the water charge, which is quite unnecessary, but which stems from the hiving-off of water and sewerage matters from local authority control—qualify for rebate in the same way that rates qualify for rebate?
The second point relates to the question of enforcement. Under the Water Act local authorities will have great difficulties. They will have to take any defaulters to the magistrates' courts in respect of the rates and, I understand, to the county courts in respect of the water or sewerage charge. I should have expected the Government to ease the burdens on local authority treasurers by putting in the Bill a provision amending the 1967 Act so that the whole matter could be dealt with in the magistrates' courts rather than that treasurers, who are busy people, should have to chase defaulters from one court to another.
Part III of the Bill relates to the setting up of the local commissioners. It has nothing to do with the rest of the Bill; it is quite extraneous. It has nothing to do with finance. It has been grafted on to this weak, miserable little Bill presumably to make it more popular. We welcome any provision which gives the ordinary citizen redress against maladministration, but is this the right Bill in which to do it or should it be done in a separate Bill? Also, is this the right time to introduce it?
Local authorities are in the turbulence of reorganisation as to their boundaries,

as to water and health, responsibility for which has been taken from them, as to staffing and now, under the Bill, as to finance. The magic date of 1st April 1974 is not the right time to create the local commissioners. I do not think the public would disagree with that, and I am sure that local authorities would welcome some delay, even by 12 months, to allow them to settle in their new structure before the implementation of this new and completely novel local commissioners idea.
As my hon. Friend the Member for Manchester, Gorton (Mr. Marks) said, the public should have the statutory right to go direct to the commissioners rather than through councillors. I know of the provision for checks and balances in Clause 25. Incidentally, despite the Minister's intervention, I cannot see in Clause 25 provision whereby a Member of Parliament can go to the local commissioner. I realise that, if one member of an authority will not go to him, another member can do so, but I cannot see anything in the clause which gives Members of Parliament the right to go to the local commissioners in the way that they can go to the Parliamentary Commissioner. As my hon. Friend the Member for Gorton rightly said, we are regarded locally as the ombudsmen and we must have direct access to the commissioners. However, I should prefer members of the public to be able to go to them in their own right if they so wished.
Although local government has to pay for the administrative structure of the commissioners, it is the Secretary of State who will do all the appointing. Local authorities certainly have a grievance here. Either they should have much more say in the appointing of the commissioners or the Government themselves should pay for the servicing of this arrangement. The Government should not charge local authorities with the cost of running this service and reserve to the Minister the right to make appointments. Therefore, even though we welcome this part of the Bill, it is a qualified welcome. It is inept as to time and as to the clumsy provisions by which a member of the public has access to a commissioner. But, most important of all, the Bill fails dismally to specifiy the rate and the grant. The Government have singularly failed to tackle the root problem of inadequate resources for local government or to


tackle with any heart the regressive nature of the rating system.
While it is unlikely that we shall vote against the Second Reading of this puny, tiny little Bill, I ask hon. Members on all sides of the House to consider all the speeches that have been made—there have been many very good speeches by Conservative Members—and to go into the Lobby in support of the reasoned amendment to record what can only be described as the contempt of this House, the contempt of local government and the contempt of millions of ratepayers at the dismal failure of the Government to deal with a major problem and to deal with it at the right time.

9.32 p.m.

The Minister for Local Government and Development (Mr. Graham Page): I start in perfect harmony with the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) by stressing the importance of local government to every citizen of the land, and therefore the importance of the Bill, and by denying that it is a puny little Bill, as the hon. Member for Widnes (Mr. Oakes) called it. It is, in fact, three or four Bilis rolled into one. As the hon. Member for Widnes rightly said, the ombudsman has little to do with the financial side, but we have taken the opportunity of providing by statute for something for which I thought both sides of the House have wanted to provide for some time past.
These two or three Bills rolled into one deal with block grants, general grants, specific grants, individual rate relief, the ombudsman and the removal of a number of controls over local authorities. Yet this Bill does not deal with that with which hon. Members are most concerned—the question of how much, as the hon. Member for Small Heath put it. Not only does it not deal with how much; it does not deal with how much there will be in grants and, therefore, how much will have to be raised in rates. It is an enabling Bill and therefore, until the negotiations with local authority associations are complete, I cannot put a figure to the exercise of the powers which the Bill gives to the Secretary of State. Nevertheless, I shall try to answer as many of the questions which have been raised as I possibly can.
Many hon. Members have indicated that we cannot leave the rating system where it is, and it has been suggested, particularly from the Opposition Front Bench, that we should have a Royal Commission. I do not think we should get any further by means of a Royal Commission than we did by means of the Green Paper of two years ago. We should only have discussion before the Royal Commission, repeating the discussion on local government finance, which the Government stimulated by issuing that Green Paper; it would be both disastrous and defeatist to put the whole matter back into the melting pot. I say that against the background of the statement made by my right hon. and learned Friend the Secretary of State that this is not the end of the road, and it is not the final statement on local government finance. We believe that it is the right statement for the present moment when local government is under the stress of reorganisation, but that does not mean that we have decided for ever the structure of local government finance. I thought that my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) put this very well when he said, in effect, that as we are undertaking a massive reorganisation it is surely wise to let the effects settle before we give further work to the local councillors who are subject to that reorganisation.
I was asked whether we should have brought the Bill before the House earlier; should we have started to reorganise the finance of local government before we reorganised its structure? There would have been advantages in carrying out all these operations together; right hon. and hon. Gentlemen opposite know that that has been my personal view. However, it would have been rather an indigestible piece of legislation for the House to stomach. There were considerable difficulties in reorganising the structure of local government, apart from the problems involved in dealing with the financial side.
It would have been very difficult to decide the right structure for the finance of local government before we decided what the functions were and saw how those functions worked out. We have left it a great deal to the local authorities to decide between themselves what functions shall be carried out by one or the other.


We ought to see how that works out in practice. It would have been difficult to bring forward a Bill at an earlier stage.
The other half of the complaint about the late date of the Bill is that it has not given local authorities enough time to budget for next year's expenses and their revenues. But this happens every year. The local government budget has been in November ever since we had the rate support grant. Local authorities are used to negotiating with Government Departments over the period from July to November. On this occasion, the statutory meeting at which the final figure of relevant expenditure and the amount that the central Government will contribute to that relevant expenditure is agreed will be held on 27th November.
We had a contrary argument from my hon. Friend the Member for Essex, South-East (Sir Bernard Braine). I am sorry to couple my hon. Friend for a moment with the hon. Member for Ripon (Mr. Austick) who both said that we should have delayed the Bill for a year or two. If I may, I shall return to that argument in some detail. It would have been quite impossible for local government to continue to function on the formulae of the rate support grant and other grants that apply to the present structure of local government for these could not have applied to the new structure on 1st April.
I want to deal with the relief of local authority expenditure before dealing with the rate support grant. The expenditure has been relieved of the local health services, to the value of about £170 million, of the school health service, about £35 million, of 90 per cent. of teacher training and student awards—that, in answer to my hon. Friend the Member for Harwich (Mr. Ridsdale), is worth £126 million—of 90 per cent. of rate rebates which we expect will amount to about £95 million—so that the relief to local authorities in that connection will be between £85 million and £90 million—and of sewerage and water which eventually will be taken off the local authority bill to the extent of between £213 million and £214 million. There will also be the separate national parks grant. I shall return to that later.
I was asked why we had decided upon a 90 per cent. and not 100 per cent. subsidy for rate rebates and for teacher

training and student awards. I suppose that I should be used by now to the Oliver Twist attitude. If we give more, we are asked for yet more. The teacher training and student awards which have been included previously in the relevant expenditure, ranking for rate support grant at 60 per cent., will now rank for an increase to 90 per cent. Rate rebates at 75 per cent. will be increased to 90 per cent. While local authorities retain administrative and discretionary powers in certain matters, they should not merely be post offices.
My hon. Friend the Member for Harwich pressed hard the case which he has put so frequently and eloquently before the House—namely, to transfer all the costs of education to the Exchequer. Local authorities still retain considerable discretion in the administration of education. It is easy to say that teachers' salaries should be transferred to the Exchequer, but the local authorities would still have a wide discretion as to the number of teachers whom they employ.
We should hesitate before removing such functions from local government or removing the expense of those functions and, therefore, the discretion operated by local government in the expenditure of money. There may be certain items in respect of which we could go further than we have on this occasion. For example, further education expenses are pooled and local authorities have little discretion in these. These are the sort of things which we can consider. As my right hon. and learned Friend said, this is at least a start in the transfer to the Exchequer of some items in which local authorities have practically no discretion.
In answer to my hon. Friend the Member for Harwich, the rate support grant is not a Chinese puzzle. Perhaps I can describe the rate support grant and the distribution of it to show where the Bill improves the system. The process of deciding and distributing the taxpayers' contribution to local government revenue—that is, the rate support grant—is first to estimate the total public expenditure of all local authorities for the coming year. That is done at the coming year's prices, which in this case would be 1974 prices.
From the estimate of total expenditure—as an example I take a round figure


of £5,500 million—we deduct certain items to reach what is called the relevant expenditure. To take another round figure, that might be £5,000 million. If we were to apply this year's percentage—60 per cent.—the taxpayer would be contributing £3,000 million. The rest would have to be raised by rates, half from domestic ratepayers and half from industrial, commercial and other properties.
Next, we come to the distribution of the £3,000 million. That is where the Bill has an important effect. First, the Exchequer pays the domestic element. That is now 6p off the rate poundage. The Exchequer comes in as a ratepayer for that amount on every householder's rate bill. As my right hon. and learned Friend has said, we propose to put up that figure to 10p at least. If any householder in any area suffers from some unexpected twist in the needs or resources element formula, not only will the 10p be paid by the Exchequer but the Bill makes it possible to use that factor geographically. This device is now in the Bill, and that gives much greater flexibility to meet the losses in those areas through another formula to which I shall come.
For example, one area may lose a resources grant which it was receiving in the previous year, or have to pay more for water and sewerage. We shall use the domestic element to correct this even by giving more than 10p, as I have explained. Next, we calculate the resources element, having deducted the domestic element. Up to now we have taken an average 1p rate over the whole country. Following discussions with local authorities we are intending to base this on rateable value in future, so as to give greater certainty to local authorities. We have previously fixed this at an average over the whole country.
Under the formula now proposed we shall place that line a little higher, so that a greater part of the remainder of the £3,000 million will count as resources element. Up to this point I have been talking about figures out of the £3,000 million, totalling only about £1,000 million, leaving £2,000 million for the needs element. We are providing a new needs element which will make better

provision for the conurbations, to which the hon. Member for Widnes referred as well as for the cities. We gave an undertaking some time ago that we proposed to amend the needs formula to this extent.
Because a greater part of the rate support grant will go to assisting the cities which have met with great difficulties it means that there will not be so much grant for the well-to-do areas. To balance that out and to prevent the impact on the individual ratepayers in those areas from being too harsh we propose to apply a formula both through the domestic element and by a weighting. We have always provided a London weighting which applied to London, Hertfordshire, Essex and Surrey. There is no intention of discontinuing that. I say that in answer to my hon. Friend the Member for Essex, South-East, who specifically asked me that question. We have to consider a further area of London weighting.

Mr. Oakes: I do not know whether the Minister is coming to this point, but will he deal with the issue of Clause 2(4) and with what I consider to be an injustice in the metropolitan counties, whereby if the country as a whole is over the national average, each individual metropolitan district is denied its resources element'?

Mr. Page: I was coming to that. I realise that some anxiety has been voiced over the provisions of that clause. I take it that the objection is to the Secretary of State's power to make regulations under which a metropolitan district could qualify for a resources element only if the rateable resources of the county as a whole were below the national standard. We do not propose to use this power certainly in the grant settlement for 1974–75.
Under Clause 10 my right hon. and learned Friend must consult local authority associations before making use of the regulation-making powers relating to Part I. There would be every opportunity for the associations to make their views known before the power given in Clause 2(4) was used. It is reasonable to preserve a balance. The metropolitan counties and the Greater London Council have power to operate rate equalisation schemes. It is a reasonable counterpart to this that the Secretary of State should have power to treat such a metropolitan area as a whole.

Mr. Denis Howell: About 10 minutes ago the Minister said, in answer to a question about timing and lack of opportunity for treasurers to consider the rate support grant, that this was a normal procedure which was followed every year. I am sure the House is grateful for the extraordinary explanation of the complicated formula that the Government are to propose. It is clear that this will happen every year. This year is a special year, and it will take weeks for treasurers to understand and assess the difficult formula which the Minister has outlined. Will he look at the timetable that is available to the House and local authorities for consideration of the rate support grant?

Mr. Page: I thought I had made the matter very elementary—indeed, I was afraid that I was making it too elementary for the hon. Gentleman. I thought he knew all about it. Local authority treasurers have been discussing the matter for a considerable time as part of normal negotiations. We could not have postponed the introduction of a new grant, because we had undertaken to help the cities.
My hon. Friend the Member for Essex, South-East suggested that we should have postponed this matter for a year. However, to apply the old 1966 Act formula again in 1974–75 would, because of reorganisation, bring about a totally random distribution of grant. Thus, in comparison with what happened before reorganisation, some of the metropolitan areas and some of the Home Counties round London would lose and some would gain quite indiscriminately. Because of the existence of the new authorities, a reform of the grant was needed.

Sir Bernard Braine: My right hon. Friend will realise that that suggestion was made because the House is not in a position to evaluate the effect of the proposals on the level of rates next year. Certain concessions have been made and it may be that they will alter the picture. But my right hon. Friend should not make too heavy weather of this. Before it gives its blessing to any measure that flows from the Bill, the House is entitled to have information. It has not yet got it.

Mr. Page: Before the House decides on the actual figures, the regulations for the grant will come before the House and we shall then be able to provide figures. I am in exactly the same difficulty over figures as is my hon. Friend the Member for Essex, South-East. This is a debate on a Bill which seeks to give power—and a flexible power—to the Secretary of State to try to meet exactly the sort of points which my hon. Friend has put before the House today. His speech was cogent and forceful—all the more cogent because of the moderate tones in which he expressed himself. I thank him for the way he put his points. We are aiming at exactly the same result.

Mr. Elysian Morgan: It is not a question of the figures. It is a question of the main criteria, namely the headings of the formula which will be the basis of calculations. I accept that the figures cannot be given at this stage but surely the main formula can be disclosed to the House.

My. Page: But I have given the main formula. I have said that, so far as the domestic element is concerned, it will be 10p and will be geographically varied above 10p. As for the resources grant, I cannot give the percentage. But I have indicated that by raising the figure it will be a greater amount of the rate support grant than before. As for the needs element, the hon. Member will find this set out in the consultative paper. There are in fact six matters there set out. The main one is a new social services unit which will take into account the expenditure which many districts find not taken into account in the present formula.
As the hon. Member for Cardigan (Mr. Elystan Morgan) has intervened, perhaps I may answer his points, because he made a powerful speech in defence of Wales. The average domestic rate payment in 1973–74 in Wales is £50, which compares with £66 for England. Therefore, rate burdens in Wales are much lower than in England. In Cardigan the average domestic rate payment in 1973–74 is £29, so the hon. Gentleman's constituents have not suffered too badly. He can go back and assure them of that.
The hon. Member for Small Heath mentioned other forms of tax which we should allow local authorities to raise. Of course, he put forward no alternative


to the rating system other than a Royal Commission. This is not what one expects from the Opposition when they are attacking a Bill which, according to the reasoned amendment,
makes no provision for additional sources of local finance other than the rating system.
The hon. Gentleman put forward about half a dozen sources of revenue. He said that we should launch out in some fine boats on a new sea. The fine boats he defined as fuel tax, income tax, and all the others, and from every one of these he himself pulled the bung so that they sank. He explained why we should not employ any of those, except lotteries. My right hon. and learned Friend said that we are considering lotteries as a possibility for local government finance. The hon. Gentleman sabotaged all the suggestions that he himself put forward. I do not know whether he wants to proceed with local income tax, which could be given just as easily with an increase in the rate support grant.
The reasoned amendment, which I shall ask the House to reject, is based on the statement that the Bill
provides insufficient financial provision for local authorities to enable them to meet the need for essential services and the increased costs of administration".

The Bill does not deal with this matter in specific figures. It empowers the Secretary of State to apply a procedure and formula that will make sufficient financial provision for local authorities to carry on local government services from the rates they raise.

The next item in the amendment, which relates to local government reorganisation, suggests that it
will inevitably increase the inequitable burden on the domestic ratepayer".
I have already made clear how we are preventing the burden from falling on the domestic ratepayer by increasing the domestic element.

The amendment then states that the Bill
makes no provision for additional sources of local finance other than the rating system.

The hon. Member or Small Heath, having put forward a list of possible alternatives, destroyed them all and suggested that we go back to a Royal Commission. That is a defeatist attitude. I ask the House to reject the amendment and to give a Second Reading to the Bill.

Question put, That the Amendment be made:—

The House divided: Ayes 178, Noes 190.

Division No. 6]
AYES
[10.0 p.m.


Allaun, Frank (Salford, E.)
Dempsey, James
Hattersley, Roy


Archer, Peter (Rowley Regis)
Doig, Peter
Hatton, F.


Armstrong, Ernest
Dormand, J. D.
Houghton, Rt. Hn. Douglas


Ashton, Joe
Douglas-Mann, Bruce
Howell, Denis (small Heath)


Austick, David
Duffy, A. E. P.
Hughes, Mark (Durham)


Barnett, Guy (Greenwich)
Dunnett, Jack
Hughes, Robert (Aberdeen, N.)


Barnett, Joel (Heywood and Royton)
Eadie, Alex
Hughes, Roy (Newport)


Bidwell, Sydney
Edelman, Maurice
Hunter, Adam


Bishop, E. S.
Edwards, Robert (Bilston)
Janner, Greville


Blenkinsop, Arthur
Edwards, William (Merioneth)
Jager, Mrs. Lena


Booth, Albert
Evans, Fred
Jenkins, Hugh (Putney)


Boothroyd, Miss Betty
Ewing, Harry
John, Brynmor


Bradley, Tom
Fisher, Mrs. Doris (B'ham, Ladywood)
Johnson, Carol (Lewisham, S.)


Brow, Robert C. (N'c'tle-u-Tyne, W.)
Fitch, Alan (Wigan)
Johnson, James (K'ston-on-Hull, W.)


Brow, Hugh D. (G'gow, Provan)
Fletcher, Ted (Darlington)
Johnson, Walter (Derby, S.)


Brow, Ronald (Shoreditch &amp; F'bury)
Ford, Ben
Jones, Barry (Flint, E.)


Campbell, I. (Dunbartonshire, W.)
Fraser, John (Norwood)
Jones, Dan (Burnley)


Carmichael, Neil
Freeson, Reginald
Jones, Gwynoro (Carmarthen)


Carter-Jones, Lewis (Eccles)
Galpern, Sir Myer
Jones, T. Alec (Rhondda, W.)


Castle, Rt. Hn. Barbara
Garrett, W. E.
Kaufman, Gerald


Clark, David (Colne Valley)
Gilbert, Dr. John
Kelley, Richard


Coleman, Donald
Ginsburg, David (Dewsbury)
Kerr, Russell


Concannon, J. D.
Golding, John
Kinnock, Neil


Crawshaw, Richard
Grant, George (Morpeth)
Lambie, David


Crossman, Rt. Hn. Richard
Grant, John D. (Islington, E.)
Lamborn, Harry


Cunningham, Dr. J. A. (Whitehaven)
Griffiths, Eddie (Brightside)
Lamond, James


Davidson, Arthur
Hamilton, James (Bothwell)
Latham, Arthur


Davies, G. Elfed (Rhondda, E.)
Hamilton, William (Fife, W.)
Lawson, George


Davies, Ifor (Gower)
Hamling, William
Leadbitter, Ted


Davis, Clinton (Hackney, C.)
Hannan, William (G'gow, Maryhill)
Leonard, Dick


Davis, Terry (Bromsgrove)
Hardy, Peter
Lomas, Kenneth


Deakins, Eric
Harper, Joseph
McBride, Neil


Doll, Rt. Hn. Edmund
Harrison, Walter (Wakefield)
McCartney, Hugh




McElhone, Frank
Oswald, Thomas
Stallard, A. W.


Machin, George
Padley, Walter
Stoddart, David (Swindon)


Maclennan, Robert
Palmer, Arthur
Stonehouse, Rt. Hn. John


McMillan, Tom (Glasgow, C.)
Pannell, Rt. Hn. Charles
Stott, Roger


McNamara, J. Kevin
Parker, John (Dagenham)
Strang, Gavin


Mallalieu, J. P. W. (Huddersfield, E.)
Pavitt, Laurie
Summerskill, Hn. Dr. Shirley


Marks, Kenneth
Peart, Rt. Hn. Fred
Thomas, Rt. Hn. George (Cardiff, W.)


Marquand, David
Pendry, Tom
Thomas, Jeffrey (Abertillery)


Marsden, F.
Perry, Ernest G.
Tope, Graham


Marshall, Dr. Edmund
Prentice, Rt. Hn. Reg.
Torney, Tom


Mayhew, Christopher
Probert, Arthur
Tuck, Raphael


Meacher, Michael
Radice, Giles
Varley, Eric G.


Mellish, Rt. Hn. Robert
Reed, D. (Sedgefield)
Wainwright, Edwin


Millan, Bruce
Ridsdale, Julian
Walker, Harold (Doncaster)


Miller, Dr. M. S.
Roberts, Albert (Normanton)
Wallace, George


Milne, Edward
Roberts, Rt. Hn. Goronwy (Caernarvon)
Watkins, David


Mitchell, R. C. (S'hampton, Itchen)
Robertson, John (Paisley)
Weitzman, David


Morgan, Elystan (Cardiganshire)
Roderick, Caerwyn E. (Brc'n &amp; R'dnor)
Wellbeloved, James


Morris, Alfred (Wythenshawe)
Ross, Rt. Hn. William (Kilmarnock)
Whitlock, William


Morris, Charles R. (Openshaw)
Sandelson, Neville
Williams, W. T. (Warrington)


Morris, Rt. Hn. John (Aberavon)
Sheldon, Robert (Ashton-under-Lyne)
Wilson, Alexander (Hamilton)


Mulley, Rt. Hn. Frederick
Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Wilson, William (Coventry, S.)


Oakes, Gordon
Silkin, Hn. S. C. (Dulwich)
Woof, Robert


Ogden, Eric
Silverman, Julius



O'Halloran, Michael
Skinner, Dennis
TELLERS FOR THE AYES:


O'Malley, Brian
Small, William
Mr. Michael Cocks and


Oram, Bert
Smith, John (Lanarkshire, N.)
Mr. James A. Dunn.


Orbach, Maurice
Spriggs, Leslie





NOES


Allason, James (Hemel Hempstead)
Gardner, Edward
Macmillan, Rt. Hn. Maurice (Farnham)


Amery, Rt. Hn. Julian
Gibson-Watt, David
McNair-Wilson, Michael


Archer, Jeffrey (Louth)
Gilmour, Ian (Norfolk, C.)
McNair-Wilson, Patrick (New Forest)


Astor, John
Gower, Raymond
Marten, Neil


Atkins, Humphrey
Grant, Anthony (Harrow, C.)
Mather, Carol


Baker, Kenneth (St. Marylebone)
Green, Alan
Mawby, Ray


Baker, W. H. K. (Banff)
Griffiths, Eldon (Bury St. Edmunds)
Maxwell-Hyslop, R. J.


Balniel, Rt. Hn. Lord
Grylls, Michael
Meyer, Sir Anthony


Bell, Ronald
Gummer, J. Selwyn
Mills, Peter (Torrington)


Benyon, W.
Gurden, Harold
Miscampbell, Norman


Biffen, John
Hall, Miss Joan (Keighley)
Mitchell, Lt.-Col. C. (Aberdeenshire, W.)


Biggs-Davison, John
Hall, Sir John (Wycombe)
Mitchell, David (Basingstoke)


Boardman, Tom (Leicester, S. W.)
Hall-Davis, A. G. F.
Moate, Roger


Boscawen, Hn. Robert
Hamilton, Michael (Salisbury)
Money, Ernie


Bossom, Sir Clive
Hannam, John (Exeter)
Monks, Mrs. Connie


Bowden, Andrew
Harrison, Brian (Maldon)
Monro, Hector


Braine, Sir Bernard
Harrison, Col. Sir Harwood (Eye)
Montgomery, Fergus


Bray, Ronald
Haselhurst, Alan
More, Jasper


Brewis, John
Hastings, Stephen
Morgan, Geraint (Denbigh)


Brinton, Sir Tatton
Hayhoe, Barney
Morgan-Giles, Rear-Adm.


Brocklebank-Flowler, Christopher
Hicks, Robert
Morrison, Charles


Brown, Sir Edward (Bath)
Hiley, Joseph
Mudd, David


Butler, Adam (Bosworth)
Holland, Philip
Neave, Airey


Carlisle, Mark
Holt, Miss Mary
Nott, John


Chapman, Sydney
Hordern, Peter
Onslow, Cranley


Clark, William (Surrey, E.)
Hornby, Richard
Owen, Idris (Stockport, N.)


Clarke, Kenneth (Rushcliffe)
Hornsby-Smith, Rt. Hn. Dame Patricia
Page, Rt. Hn. Graham (Crosby)


Clegg, Walter
Howell, Ralph (Norfolk, N.)
Page, John (Harrow, W.)


Cockeram, Eric
Hutchison, Michael Clark
Parkinson, Cecil


Cooke, Robert
Iremonger, T. L.
Percival, Ian


Coombs, Derek
James, David
Peyton, Rt. Hn. John


Cooper, A. E.
Jennings, J. C. (Burton)
Pink, R. Bonner


Cormack, Patrick
Jessel, Toby
Powell, Rt. Hn. J. Enoch


Costain, A. P.
Jones, Arthur (Northants, S.)
Price, David (Eastleigh)


Crouch, David
Jopling, Michael
Prior, Rt. Hn. J. M. L.


Davies, Rt. Hn. John (Knutsford)
Kaberry, Sir Donald
Proudfoot, Wilfred


d'Avigdor-Goldsmid, Maj.-Gen. Jack
Kellett-Bowman, Mrs. Elaine
Pym, Rt. Hn. Francis


Dean, Paul
Kimball, Marcus
Raison, Timothy


Deedes, Rt. Hn. W. F.
King, Evelyn (Dorset, S.)
Ramsden, Rt. Hn. James


du Cann, Rt. Hn. Edward
Kinsey, J. R.
Redmond, Robert


Edwards, Nicholas (Pembroke)
Kitson, Timothy
Reed, Laurance (Bolton. E.)


Elliot, Capt. Walter (Carshalton)
Knight, Mrs. Jill
Rees-Davies, W. R.


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Knox, David
Rippon, Rt. Hn. Geoffrey


Eyre, Reginald
Lamont, Norman
Roberts, Wyn (Conway)


Fenner, Mrs. Peggy
Lane, David
Rossi, Hugh (Hornsey)


Fidler, Michael
Langford-Holt, Sir John
Rost, Peter


Finsberg, Geoffrey (Hampstead)
Le Marchant, Spencer
Royle, Anthony


Fisher, Nigel (Surbiton)
Longden, Sir Gilbert
Russell, Sir Ronald


Fletcher-Cooke, Charles
Loveridge, John
St. John-Stevas, Norman


Fookes, Miss Janet
Luce, R. N.
Scott, Nicholas


Fowler, Norman
MacArthur, Ian
Shaw, Michael (Sc'b'gh &amp; Whitby)


Fox, Marcus
McCrindle, R. A.
Shersby, Michael


Fry, Peter
McMaster, Stanley
Sinclair, Sir George







Skeet, T. H. H.
Taylor, Robert (Croydon, N. W.)
Warren, Kenneth


Smith, Dudley (W'wick &amp; L'mington)
Tebbit, Norman
Wells, John (Maidstone)


Soref, Harold
Temple, John M.
Wilkinson, John


Speed, Keith
Thomas, John Stradling (Monmouth)
Winterton, Nicholas


Spence, John
Thomas, Rt. Hn. Peter (Hendon, S.)
Wolrige-Gordon, Patrick


Sproat, Iain
Thompson, Sir Richard (Croydon, S.)
Wood, Rt. Hn. Richard


Stanbrook, Ivor
Trafford, Dr. Anthony
Woodhouse, Hn. Christopher


Stewart-Smith, Geoffrey (Belper)
Trew, Peter



Stuttaford, Dr. Tom
Turton, Rt. Hn. Sir Robin
TELLERS FOR THE NOES:


Sutcliffe, John
Vaughan, Dr. Gerard
Mr. Hamish Gray and


Tapsell, Peter
Waddington, David
Mr. Bernard Weatherill.


Taylor, Edward M. (G'gow, Cathcart)
Walder, David (Clitheroe)

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 39 (Amendment on second or third reading), and agreed to.

Bill accordingly read a Second time and committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

Orders of the Day — BUSINESS OF THE HOUSE

Ordered,
That the Channel Tunnel (Initial Finance) Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Humphrey Atkins.]

Orders of the Day — LOCAL GOVERNMENT [MONEY]

Queen's Recommendation having been signified—

Motion made, and Question proposed,
That, for the purposes of any Act of the present Session to make further provision, in relation to England and Wales, with respect to the payment of grants to local authorities, rating and valuation, and the classification of highways, to extend the powers of the Countryside Commission to give financial assistance, and to provide for the establishment of Commissions for the investigation of administrative action taken by or on behalf of local and other authorities, it is expedient to authorise—

(1) the payment out of money provided by Parliament of—
(a) grants to local authorities, for the year 1974–75 and each subsequent year, of an amount equal to so much of the aggregate amount available for grants as remains after the deduction of

(i) the proportion of that amount which the Secretary of State estimates will be allocated to grants in respect of specific services, other than the grants mentioned in paragraphs (d) and (e) below, and
(ii) the proportion of that amount which he prescribes as the aggregate amounts of the grants mentioned in paragraphs (b) and (c) below.


and for the purposes of this paragraph "the amount available for grants", in relation to any year, means the aggregate amount which the Secretary of State estimates is to be available for the payment out of money provided by Parliament of grants, other than housing subsidies and the grants mentioned in paragraphs (d) and (e) below, to local authorities for that year;
(b) grants to county councils and the Greater London Council, for the year 1975–76 and each subsequent year, in respect of the estimated expenditure in connection with transport matters of those councils and of district councils, London borough councils and the Common Council of the City of London;
(c) grants to county councils, for the year 1974–75 and each subsequent year, in respect of their estimated expenditure in connection with National Parks;
(d) grants, for the year 1974–75 and each subsequent year, to any rating authority granting rate rebates in that year of an amount equal to 90 per cent. of the aggregate amount of the rebates granted by the authority under the statutory rate rebate scheme or, if a local rate rebate scheme is in force, of the rebates which the authority would have granted, had the statutory rate rebate scheme been in force; and
(e) grants to each local education authority, for the year 1974–75 and each subsequent year, of an amount equal to 90 per cent. of the aggregate amount paid in that year by the authority in pursuance of awards bestowed under section 1(1) of the Education Act 1962 and by way of grants under section 2(3) of that Act;

(2) the payment out of money provided by Parliament of any other expenses incurred under the said Act of the present Session by any Minister; and

(3) any increase attributable to the provisions of the said Act in the sums payable out of such money under any other Act.—[Mr. Graham Page.]

Mr. Arthur Blenkinsop: The Money Resolution seems to me to be drafted extremely tightly and in such a way as possibly to prevent reasonable discussion of a number of points in Committee. May we be told whether it will be in order, under the drafting of the resolution, to move amendments, for example, to increase the grant paid for students from 90 per cent.


to 100 per cent., which is a perfectly reasonable matter to raise in Committee? The terms of the resolution appear to rule out the possibility of moving such amendments.

The Minister for Local Government and Development (Mr. Graham Page): The Money Resolution follows the Bill and is restricted to the 90 per cent. written into the Bill in the cases mentioned by the hon. Member for South Shields (Mr. Blenkinson). The resolution, in the normal way, is drawn to cover what is stated

in the Bill. It allows for a flexible figure and amendments in the case of the grant about which the hon. Member was concerned and with which I failed to deal in closing the debate on the Bill. We have in mind a grant of 75 per cent. towards the expenditure on the Countryside Commission. That is not mentioned in the Bill and, therefore amendments on it can be put down. As to the 90 per cent., the resolution is drawn to accord with those figures.

Question put and agreed to.

Orders of the Day — CHANNEL TUNNEL (INITIAL FINANCE) BILL

Considered in Committee

[Mr. E. L. MALLALIEU in the Chair]

Clause 1

INITIAL FINANCE FOR THE CHANNEL TUNNEL

10.18 p.m.

Mr. Robert Sheldon: I beg to move Amendment No. 2, in page 1, line 8, leave out paragraph (a):

The Deputy Chairman: With this amendment we are to take the following amendments: No. 3, in page 1, line 9, after 'may' insert 'propose to'.
No. 4, in page 1, line 9, leave out from 'guarantee' to first 'the' in line 10.
No. 5, in page 1, line 10, leave out
'and the payment of interest on'.
No. 15, in page 2, line 33, after 'guarantee' insert:
'has been negotiated but before it'.
No. 17, in page 2, line 34, after second 'the' insert 'proposed'.
No. 20, in Clause 2, page 3, line 13, after second 'section' insert:
'or under subsection (1) of section 1 of this Act'.

Mr. Sheldon: Paragraph (a) concerns itself with the guarantee that is to be given by the Treasury to the private interests which are to construct the railway tunnel system. Amendment No. 2 covers the general question of the guarantee and I wish to raise only one small point of clarification on it. This concerns the sums borrowed relating to the work done, as it is put in the Bill—
before or … during the initial period".
As I read it, this means expenses incurred before the passing of the Bill. I should be grateful for an explanation of how much is involved.
I am not wedded to the precise wording of any of my amendments. I hope that in my explanations the intention will

be clear. If there is any omission or lack of clarity, as is inevitable in comparison with the expertise available to the Minister through his parliamentary draftsmen, and if the general point is accepted, I hope that the Minister will introduce such wording as he thinks would be an improvement upon that which was available to a back bencher with limited resources.
Amendment No. 3 deals with the guarantee of sums borrowed by private interests. One thing which must make us sceptical—in fact suspicious—is that we are asked to empower the Government to make payments of these amounts before we know the precise nature of the agreement.
As long ago as 8th August 1972 the hon. Member for Canterbury (Mr. Crouch) asked when the Secretary of State for Trade and Industry proposed to make more references to the Monopolies Commission, and the then President of the Board of Trade replied:
My right hon. Friend has decided to make three new references to the Monopolies Commission. They relate to cross-Channel ferry services …".—[OFFICIAL REPORT, 8th August, 1972; Vol. 842, c. 402.]
It is about 15 months since that reference was made to the commission, yet we still have not received the report. We know that the commission does not move at a great pace, but it is likely that not many more months will pass before it reports. The report will have a considerable bearing on the profitability of the Channel Tunnel, and hence upon the nature of the Government guarantee. Therefore, although the right hon. Gentleman is invoking the use of private capital in order to be able, as he sees it, the more effectively to monitor public expenditure in this area, he knows, or should know, that the profitability of the enterprise will largely be decided by the Government themselves.
If they make the guarantees and find that despite them the companies will not succeed in producing a profitable venture, the Government will be forced either to let the venture fail or to take certain action based upon their powers, the first of which is to determine the tolls. If they do so, the profitability of the scheme from which the private interests will benefit wil lalso be determined by the Government.
The profitability, and hence the prospect of not having to call on those guarantees, will depend on the amount of competition, which is determined by the Government, because when the commission finally makes its report the Government will have to decide whether to take action to reduce the extent of the monopoly held by the Channel ferry services.
If the Government decide to increase the amount of competition, and so bring down the charges of the ferry services, that will have a substantial effect upon the profitability of the tunnel.
The availability of a good road system will depend upon the profitability of the Channel tunnel. If the Government decide to spend considerable sums of money on improving the road facilities leading to the tunnel, it must be expected that more people will use the tunnel, and so make it a greater success.
If the Government decide to spend money on improving the rail links and the terminals, they will be improving the prospects for the tunnel.
All that is irrespective of what the private interests do. It does not matter how efficient or inefficient they may be; the Government will decide by their very action how much profit accrues to those private interests. The converse holds, because if they decide not to permit greater competition and not to build the roads and rail links and terminals—in other words, if they decide to starve certain peripheral services for the Channel Tunnel—the scheme will not be successful.
The consequence of all this is that private capital is at the Government's mercy. Knowing the financial expertise of these bodies, we must assume that they are aware of that. They know that they are at the Government's mercy, and when they make their calculations about the profitability which they will require they must have in mind what the Government intend to do. If that is so, the Government should tell the House of Commons what they intend to do and how they intend to work.
But the important point is this. When the Government see the private interests, they are not getting an independent

assessment; they are looking in the mirror. They are getting a reflection of their own intentions. When they say that this 10 per cent. gives them some objectivity, the only objectivity is that of the looking glass. They are deluding themselves if they think that the measures which they propose to bring in the private interests give them any advantage over what they would have if they went 100 per cent. into the scheme on their own account. The least that the House of Commons can do is to retain some control over the operation of the Channel Tunnel scheme by means of limitations for which the amendment provides.
I propose in Amendment No. 3 that the proposal to produce the agreement must be subject to the approval of the House of Commons. What the Minister is saying is, "Give us the money and we will work out a scheme which will be acceptable to the Government and to the private interests." If hon. Members agree with me, they will say that that is not enough because, the private interests being only a reflection of the Government's intentions it is not an independent examination, and the only independent examination which the House of Commons should accept is the examination which can come from the House surveying, agreeing and certainly scrutinising the agreement.
Amendment No. 4 proposes to remove from the Bill the qualification that the guarantee to the private interests shall be
in such manner and on such conditions as they"—
the Treasury—
think fit".
That allows the Treasury to guarantee the moneys, both capital and interest, in such manner as it wishes.
I wish to ask the Minister a few questions and I shall be much obliged if he answers them before the debate concludes. I shall not go into the matter of the names of the members of the private group because I hope to deal with it on a subsequent amendment, but I should like the right hon. Gentleman to tell us something about the conditions he expects to lay down and about the basis of the guarantee and what the Government intend to do to obtain agreement.
10.30 p.m.
The House will have noted the comment in paragraph 11.19 of the White Paper on the Channel Tunnel, which was published in September. That states:
Hambros Bank Limited,"—
it is not one of the members of the private group, so it is known that it is acting quite independently of the group itself—
who have acted throughout the negotiations as the Government's advisers, consider these terms"—
and these are the hypothetical terms that are in the immediately preceding paragraph—
to be fair and reasonable in relation to the need to raise money in the market.
I suggest that the need to raise money in the market is not necessarily the main criterion. What is needed is some degree of objectivity, and not the raising of money at the Government rate.
Amendment No. 5 is concerned with the payment of interest on the Treasury guarantees. We know that, under the unamended Bill the loan of the principal will carry some interest which the Government have given themselves the right to pay to the builders of the Channel Tunnel. But if the private interest has any standing at all, I should have thought that one could expect it to include in its charges enough to guarantee the interest. If it cannot do that, then even the Government ought to be contemptuous of the private involvement which they are seeking. I shall be pleased if the Minister will comment upon that point.
Amendment No. 15 is a more substantial amendment which deals with the need to obtain from the Treasury an understanding that it will not have power to dispose of the money before the Government have come back to this House. It will mean that the Government are enabled to undertake negotiations with the principal parties and to come to an agreement, but will then have to come back to this House to have that agreement ratified. If the Government believe that they have the basis of a fair and reasonable agreement, it is asking very little to say that the Government should come back to this House and lay that agreement before it, to say, "This is what we have achieved", and to ask for the approval of this House. We know

that the statement of guarantee will be laid before each House of Parliament, although we are not quite sure how detailed that statement will be and what will be in it.
An amendment which has not been selected, and I shall therefore refer to it only in passing, deals with the need for a full statement of the guarantee.
Much more important is the need for the House of Commons to see the agreement which is to form the basis of the guarantee and then to approve it afterwards. The Government cannot be so worried about their majority as to want to make sure that they get the guarantee in advance of our seeing the agreement. I fail to understand why the agreement should not be negotiated in advance of coming to the House. Instead of the Government asking for the money and then deciding what to do with it, I fail to understand why they could not have had the agreement first and then come to the House. At the very least, there should have been a provision in this legislation to the effect that before final approval was given the Government should be obliged to return to the House and, in a brief debate of 1½ hours, to explain why the agreement was satisfactory and, consequently, to secure the agreement of the House.
Amendment No. 17 is consequential upon Amendment No. 3. Oddly enough, Amendment No. 20 which has been selected was intended to be consequential upon an amendment which has not been selected. It was to provide for a guarantee to be exercisable by statutory instrument subject to annulment. However, I shall not go into that in detail. It was a consequential amendment which has been covered by another that I have discussed.
I return, then, to Amendment No. 2 which is the embracing amendment under which the other points of detail are subsumed. I find this guarantee unsatisfactory. There are a number of objections in connection with the rôle of the private interests. In this and other debates, it will be necessary to go into the rôle of these private interests and the reason why they are regarded as such an important element in the whole of this Channel Tunnel scheme.

[Sir RONALD RUSSELL in the Chair]

The Minister for Transport Industries (Mr. John Peyton): I am afraid that I cannot advise the Committee to accept these amendments. The hon. Member for Ashton-under-Lyne (Mr. Sheldon) was a little coy about coming to them in the first instance. However, perhaps I might deal briefly with their effect.
I agree that Amendment No. 2 stands on its own. The effect of it would be that the Treasury could not give any guarantees. But the French Government would still be able to do so. We would be bound by the treaty to meet 50 per cent. of any payments. In other words, we would be bound by French guarantees rather than by our own. We would also have power to meet the guarantees made by the French Government under Clause 1(2).
I do not think that that would be very sensible, and I choose my words with care when I say that. To leave ourselves without the power to give guarantees ourselves would be worse than not very sensible. It would put us into a ridiculous position where we should not be able to go ahead with the project. I have no doubt that that is the objective of the hon. Member for Ashton-under-Lyne, whose hostility to the project has never been in doubt.
The hon. Gentleman referred to the preliminary work on or in connection with the construction of a railway system under the Channel. That is money raised under Agreement No. 1 which was placed in the Library of the House last November.
Amendments Nos. 3, 15, 17 and 20, so far as any kind of affiliation procedure is possible, can be seen to have come, roughly speaking, from the same parentage. They can conveniently be dealt with together.
The Bill as it stands is in normal form. When guarantees are made it is the usual procedure for the Treasury to lay a statement as soon as possible after the guarantee is given. In effect, the amendment would require the statement to be laid just before the guarantee is given. That would be a pointless exercise. The foundation appears to be that each guarantee should be preceded by an order

which would be subject to negative resolution procedure. The purpose of the amendment is not achieved. I do not feel able to respond to the hon. Gentleman's invitation to put a better verbal garment upon his intentions as I have no sympathy with them.
The hon. Gentleman asks why the Government are not prepared at every stage, whenever a guarantee is laid, to allow the Treasury to make a statement beforehand subject to the negative procedure. The answer is simple. On the whole, having gained the authority of the House in principle and in detail for going ahead with the project, we would not wish it to be subject to regular hiccups of doubt all the way along the line. Nobody knows better than the hon. Gentleman how easy it is to delay progress even of the most laudable projects. I advise the Committee that the amendment should be rejected.
The hon. Gentleman then raised the question of the guarantees. The effect of the amendment would be to make the guarantees unconditional. I understand that this is purely an exploratory matter. He first said that Hambros must be presumed to be acting independently and then said that it probably was. All along Hambros has been totally dissociated from the project. I am sure that the hon. Gentleman did not mean to suggest the contrary. It is acting in a perfectly proper manner as an adviser to the Government. It seemed reasonable that the Government should seek the advice of a merchant banker which is independent from those who are involved. The advice has been that the conditions of guarantee are fair and reasonable. That is why we had resort to Hambros and that is why we accept its advice.
All I can offer to the hon. Gentleman about Amendment No. 5 is that the power to guarantee the payment of interest as well as repayment of capital is both normal and essential. Anything else would be unworkable. The money will be raised on fixed interest from institutions. We require either a full guarantee or an interest rate which takes account of the risk of loss of the Government as recipients of the top slice of the profits.

Mr. Sheldon: rose—

Mr. Peyton: I advise the Committee that the acceptance of this series of amendments would only defeat the purpose of the Bill and would not achieve the hon. Gentleman's purpose.

Mr. Frederick Mulley: It might be convenient if I state briefly the Opposition's view of the amendments. My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) has been diligent in seeking to improve the Bill or to make the Opposition's opposition to the Bill more effective. I am bound to tell the Committee that in the debate on the White Paper and on Second Reading we made it clear that we would oppose the Government. On the Government's figures as to the outcome of the tunnel, we were opposed to the concept of a Government guarantee.
I do not think that a tightly drawn financial Bill of this sort can be amended in any sensible way. To delete subsection (1)(a) would mean that there would be no Bill. Having voted against Second Reading, I am content to leave it there. Equally, I do not see any merit in going again into the discussion about independent inquiries, because we gave the House that alternative to the Government's proposal in the debate on the White Paper and the House, rightly or wrongly—I believe wrongly—turned it down.

10.45 p.m.

Mr. Sheldon: I very much deplore the inadequate reply given by the Minister. This is the first chance we have had to go into this matter because the right hon. Gentleman has denied the House the opportunity of a close examination through a Select Committee or in any other way. It might have been regarded as reasonable for him to have come to this Committee and given reasonable answers to the detailed questions that have been put. This has not been going on for a short time. This is symptomatic of what has happened over the past 10 years. When I tabled these amendments it was not in an attempt to score simple points. It was a reasonable attempt, I thought, to get answers to reasonable questions that had been thought out over a long period.
It might be thought that the Department and the right hon. Gentleman, knowing well where I stand, had decided

that I am not to be placated and as a consequence not to be answered properly. Therefore one assumed that the right hon. Gentleman and the Department knew my point of view thoroughly and saw no purpose in going forward to it. If this was so how is it that on 8th November the right hon. Gentleman said:
The hon. Gentleman"—
referring to me—
has frequently suggested that there should be not a bored tunnel but a bridge."—[OFFICIAL REPORT, House of Commons, 8th November, 1973 Vol. 863, c. 1240.]
If there is one thing on which I thought I had convinced the House over the years of questioning that I have directed to this project it is not that I stand in favour of any particular solution but that I am appalled at the inadequate examination which the tunnel project has received. My entire work has been towards obtaining a better examination of the project than it has so far received from the Department.

Mr. Peyton: The hon. Gentleman will recollect that I immediately corrected myself on that occasion and explained to the House and the hon. Member, with apologies, that I associated him with what he has said—the complaint that alternatives had not been adequately considered, a complaint which I strenuously resist.

Mr. Sheldon: The right hon. Gentleman will recollect that it was only as a result of an intervention that he subsequently made that correction. I am making the point that it has been the view of those in the Department that the further examination of alternatives is not necessary because it is the fount of all knowledge. I always thought that the Department had examined the project but did not wish to go into details which were long since behind it. It was only when I went to the Department and met the people concerned that I found that what I had suspected but hardly dared to believe was actually the situation—that alternatives were never adequately examined by the Government.
When we consider the length of time involved—since 1963—it is reasonable to assume that, however advanced any detailed proposals might have been, an examination over a short period, using a small allocation of manpower, might have


been put in train to meet the criticisms that have come from engineers, civil engineers, builders, constructors and all people concerned with this scheme. I have failed in questions and debate to have the matter dealt with. I thought that at any rate I could attend the Committee stage and exercise what is the right of any Member to put questions and receive considerable replies.
What worries me most is not that the Minister is failing to give me the replies because he wishes to be discourteous. I do not think he is that kind of man. It is because I suspect the Department has not investigated the matter properly and therefore does not know.
The Minister said that it is normal to give statements just before the guarantee is given. If it is normal to do that—

Mr. Peyton: What I said was that the hon. Gentleman's own amendment would require the statement to be made immediately before the guarantee was given, and that would be a perfectly senseless performance.

Mr. Sheldon: I thought that the hon. Gentleman said that it was normal that statements would be given before the guarantee. If I took down those words incorrectly, then I apologise to the right hon. Gentleman. He went on to say that, having gained the authority of the House in principle, the details do not need to be debated or discussed. Since we are now dealing with a sum of £30 million for the construction of a Channel Tunnel, it is surely not unreasonable to ask how we are to spend this money, who are the people involved, and what are the terms under which the money will be guaranteed.

Mr. Peyton: The hon Gentleman persists in misquoting me. What I said clearly was that the Government, having come to Parliament and having obtained Parliament's approval in principle and in detail, would not wish to subject the whole project to a series of parliamentary hiccups of the kind which no doubt the hon. Gentleman would be very good at engineering.

Mr. Sheldon: The right hon. Gentleman talks about the detail. I do not see any detail about the level of interest, the terms of repayment, who is to receive the

money, and so on. This detail is not in the Bill, so far as I can see. These are matters of great importance. I do not see the moneys being guaranteed as a result of certain successes or as a result of certain other matters which are not quite so successful. I see none of that in the Bill.
If I regarded the Government's record in large-scale projects as excellent, then I might be prepared to give them the benefit of the doubt. We know that when it comes to major projects of this kind, Governments of both complexions have failed to discover the proper method of controlling them. In such a situation what is fair and reasonable is to have some degree of minimum control by at least having a debate lasting one and a half hours at some time in the next year or so. But that is the kind of minimum control which the Minister and his Department are not prepared to give. If I had acquired a greater respect for decisions on these matters in the past few years, I might have been prepared to waive the need for such a close examination. But because I do not have that degree of respect for that judgment, I believe it is important to keep some degree of control.
In later amendments we come to the detail. What the Minister fails to give us is any detail about the private interests. I know that the Minister obviously is not prepared to do a great deal of answering. But this is the only forum in which we shall ever be acquainted with these facts. If Parliament does not get the facts on this occasion, it will never get them until it is too late. We have never heard why the Government believe that it is necessary to introduce private capital into the scheme.
I am not against the introduction of private capital into any scheme so long as those concerned are paying their way and introducing certain skills and understanding. I am then more than delighted. I have no doctrinaire view on that matter. But why are the Government introducing a small measure of 10 per cent. of private capital which will never achieve an independent assessment by private industry of the viability of the scheme? As I have said, it depends entirely upon Government action whether the Channel Tunnel achieves the success claimed for it.
Will the right hon. Gentleman explain, even briefly, what there is in private interest that provides a separate assessment of the likely success of the scheme that is not available to the Government making use of their own sources of information and expertise? This point was put by one of the Minister's hon. Friends and he failed to respond to it. Perhaps he will respond to it now that it has come from the back benches on both sides of the Committee.

Mr. Peyton: Perhaps I may prevail and trespass on the indulgence of the Committee to speak again to answer the last point made by the hon. Member for Ashton-under-Lyne (Mr. Sheldon). I dealt with this matter at some length on Second Reading. When I took over responsibility for this project it was already part of an agreement which had been reached by both the British and French Governments. I do not look for every opportunity and reason to overturn agreements made on behalf of a British Government. Indeed, I look for every reason to honour them.

Mr. Sheldon: The Committee will take note of that reply. I have attacked both the previous and the present Government for precisely this purpose. The only defence that the Minister for Transport Industries can offer for going along with private interests is that this was a decision by a previous Government. For this, at any rate, we are grateful, because it advances the argument considerably. I could not understand how the right hon. Gentleman, for whom I have great respect, even though I am being controversial, came to think that just by giving 10 per cent. to a private interest he could obtain an independent judgment that was not dependent upon the Government. I have put this point to him again and again, but have failed to get a reply. At least we now know the answer. The reason given by the right hon. Gentleman for the 10 per cent. private involvement is not that he believes it to be necessary, not that anybody in the Department possibly believes it to be necessary, but that, being a decision by the previous administration, he has gone along with it.

Mr. Peyton: No. I do not know whether the hon. Gentleman is purposely seeking to misquote or twist what I say. I did not say just because it was a deci-

sion by the previous administration. I said that one reason for going along with private participation, not mentioning any figure, was that it had been agreed by a previous British Government with the French Government. On the whole, I think it has been a tradition of this country for Governments not to dishonour the international understandings of their predecessors.

Mr. Sheldon: I am sorry that the right hon. Gentleman should think that I am misquoting him. What strikes me is the obvious consequence of what he said. I did not for a moment think that the right hon. Gentleman had informed the House that he did not agree with the 10 per cent. private interest. I am drawing the obvious conclusion from what he said. The right hon. Gentleman is giving this provision faint praise and saying that it was a decision of the previous Government and he finds himself unwilling to change it. There is a lack of commitment to private interests which speaks for itself.

11.0 p.m.

Mr. Eric Ogden: Could one reason for this involvement of private interests be that this was not a scheme which came from the Government to private interests, but one which, over the years, was taken up by private interests and put to the Government? This started as a private interest. My hon. Friend knows my point of view: we should build the tunnel and then take it into public control. But I should not criticise anyone outside the Government for having an idea, supporting it and getting the money to back it—something which other projects have not had—and then being allowed a share in that Government involvement.

Mr. Sheldon: My hon. Friend knows that the private company which started it before the Government's final decision to take an interest in it was The Submarine Continental Railway Company Limited, which was formed in 1881. It changed its name to The Channel Tunnel Company Limited in 1887, and it formed the basis of the private interest to which my hon. Friend referred. I do not think that the Government should feel themselves bound by all the work that this company did about 80 or 90 years ago.
I do not think that that was the reason. The reason given in the past was that private industry would provide some degree of objective assessment on the likely success of the scheme. What we have heard today shows that that is accepted. It was one of the mistakes that was made in the past, and it is being continued into the future.
I stand by what I said. I see no reason for this private involvement. That is why I tabled the amendment, and what I have heard does not cause me to change my views.

Amendment negatived.

Mr. Sheldon: I beg to move Amendment No. 6, in page 1, line 18, after 'to' insert 'one half of the'.

The Temporary Chairman: I think that it will be convenient if with this we take Amendment No. 7, in page 1, line 20, leave out 'or' and insert 'together with'.

Mr. Sheldon: Thank you, Sir Ronald.
Amendment No. 6 deals with the guarantees given in relation to sums borrowed by the two Governments. The amendment says that the British guarantee should be one half of the sum borowed. According to subsection (2), the sum guaranteed shall not exceed £30 million, or £35 million if the necessary order is put before the House and the extra money is obtained. One would expect the guarantee to amount to one half of that sum, and that is what the amendment seeks to provide.
If private companies were involved, the guarantee would provide that each of the parties would jointly and severally be liable, so that if the party fails to meet his obligations, those obligations would fall upon the remaining guarantor.
Here, however, we are dealing with the French Government, which is hardly in this kind of position. One would have thought that clauses involving this kind of arrangement would not be necessary. I understand, though, that there is a possibility that the Government referred to in line 20 might mean the French Government. This is subject to some ambiguity. Perhaps I may deal with that briefly. The clause refers to
sums borrowed in pursuance of any agreement to which the Government or any minister of the Government of the French Republic …".
I and others who have seen this interpret the first "Government" as being the

British Government and the other "Government" as the French Government. It may be that they both refer to the French Government. If that is so it may be useful, for the sake of clarity, to introduce on report some small amendment which would reduce what has appeared, to one or two people at any rate, to be an ambiguity.

The Under-Secretary of State for the Environment (Mr. Keith Speed): The hon. Member for Ashton-under-Lyne (Mr. Sheldon) has misunderstood the meaning. For reasons which I shall explain, it would not be appropriate to introduce an amendment on Report. The "Government" referred to is the French Government. It is not a reference to Her Majesty's Government. If it were to have been a reference to Her Majesty's Government, the reference would have been to "the Secretary of State". If the hon. Gentleman reads the third paragraph of the Explanatory and Financial Memorandum he will see that this is made clear.
Clause 1(3) makes it clear that if the guarantees given by the French Government do fall to be called, the payments to be made by the United Kingdom Treasury, by way of contribution, to the liability of the French Government cannot exceed £15 million or half the total ceiling of £30 million. The agreement to share the costs 50:50 is an international one, which will be enshrined in the treaty and, to cover the period before that can be ratified, in an exchange of notes signed at the same time.
The important point, and the reason why we cannot do it on Report, is that we cannot bind a foreign Government in a British Act. It is for that reason that the Bill is drafted as it is. The "Government", legally and in fact here is the French Government. If it had been the British Government, it would have referred to my right hon. and learned Friend the Secretary of State.
I hope that with that explanation—it is also explained in the Explanatory and Financial Memorandum—the hon. Gentleman will consider withdrawing his amendment.

Mr. Ogden: If in Clause 1(1)(b) it is thought necessary by the parliamentary draftsmen to include once the words
the Government of the French Republic


why did they not say so previously, saying "the French Government" in the first place, thus avoiding any possible misleading conclusions?

Mr. Speed: That is a very good question. I am advised that legally and in every other way, the manner in which it is drafted is correct and that there can be no ambiguity because in these cases it would have had to refer to the Secretary of State.

Mr. Sheldon: My hon. Friend's point has not been taken very fully into account. Clearly, if there is ambiguity to a number of us, there will be ambiguity to anyone who reads the Bill. It has fooled certain Officers of the House, as well. By simply including a couple of words we could reduce that ambiguity. I should have thought that it was one of the functions of a parliamentary draftsman, or of even the Minister on Report, to make that change.
A very important point has been raised. It will obviously be raised in a number of these multi-country deals. It is said that according to our laws or procedures a Government cannot bind a foreign Government by a British Act. Of course, we understand the purpose of treaties. Yet it is strange to see an arrangement under which we are guaranteeing a sum greater than that needed. I should have preferred to see a form of procedure which took account of these facts and perhaps even explained them.
If the Under-Secretary is willing to comment on this I should listen to his comments with interest.

Amendment negatived.

Mr. Sheldon: I beg to move Amendment No. 9, in page 2, line 1, leave out sub-paragraph (ii).
I should like a much fuller explanation here than those given so far. This is merely a probing amendment, but it probes at some important matters which have not had sufficient discussion. It deals with the responsibilities of the Secretary of State if the scheme fails. It deals with the problems of winding up the project. One of the cardinal rules in any business venture is to consider not only how much can be made if it is successful, but how much can be lost if it is unsuccessful.
Here clearly the amount of loss will not be limited necessarily to one half of the £30 million or £35 million because there may be consequential expenses as well. It is necessary to take into account here those people upon whom we depend for avoiding a loss, or if a loss arises of keeping it to a minimum. We must therefore examine the membership of the British sub-group upon whom so much will depend.
What is the Government's estimate about the division of shares between the members of the British sub-group? It will not be necessary for me at any stage to deal with the French sub-group. That is the responsibility of the French Government. First let us deal with Channel Tunnel Investments Ltd. Apart from its very great age—born 1881 and still going strong—what expertise does the company have now? It was responsible for trial borings over 80 years ago and there is a great deal of sympathy for it for being a pioneer in a venture which was not successful. But why is it a member of this private group? What influence do the Government have on the membership of this private group? How did the right hon. Gentleman view the sub-group's setting up? Did he or his predecessors attempt to influence it? Did he say that there should be some companies of this kind and some of that kind? Did he seek to influence the proportion of shares held by the company? Did he seek to ensure that the expertise the company had was that which was required for the operation?

[Mr. Carol Johnson in the Chair]

11.15 p.m.

It seems an odd sub-group. We start with Channel Tunnel Investments Ltd. That is understandable. This is a company which has been ploughing this furrow for many years and which, having done a small amount of work, claimed some special status, although there was no reason why that should have been granted.

Then we come to Rio Tinto-Zinc Corporation Ltd. This is a company concerned with mining and constructional work and is the main construction work. There are no civil engineering consultants in this group but they can be retained by others of these companies.

Then there is a list of five merchant banks—Morgan Grenfell & Co. Ltd.; Robert Fleming & Co. Ltd.; Hill, Samuel & Co. Ltd.; Kleinwort, Benson Ltd.; and S. G. Warburg & Co. Obviously the task of the merchant bankers is to raise money. I cannot see why five merchant banks are required in a sub-group of this kind.

Here I seek to correct the right hon. Gentleman, who complains of misquotations. He misquoted me in relation to Hambros. I fully respect the position of that firm and what I said does not require any alteration.

All these are merchant banks which are required in the British sub-group. Then we have the British Railways Board, whose interest is obvious and necessary. Then, most surprisingly, we have three merchant banks in the United States—Morgan Stanley & Co., First Boston Corporation, and White, Weld and Co. Ltd.

There are 11 members of the British sub-group. Five are British merchant banks and three are American finance houses or merchant banks. Eight of the 11 are in merchant banking or finance. Three companies have expertise other than finance—British Railways, Rio Tinto-Zinc Corporation, and Channel Tunnel Investments Ltd.

I asked people who are responsible for large-scale contracts, though not as large as this, what sort of group they would have. None of them remotely came near an operation such as this. It is necessary to ask why we have got a grouping that is so heavily weighted in favour of merchant banking—and American merchant banking at that. These companies are to be guaranteed. One of the consequences of this is clear. With merchant banks of this size and power, there will be considerable pressure on the Government to produce changes in their schemes and financing, and to give assistance on tolls, roads, rail and other matters of a kind which other types of company would find hard to exert on the Government. This is only speculation. I give no answer.

I have a question which requires a proper answer. Why has the structure of this British sub-group been the way it is? Why is it so peculiar? What are the advantages of a sub-group of this kind? Coupled with that, why has the old

Channel Tunnel company got such a privileged position? What has it to offer in the 1970s? Why is there only one engineering concern other than the British Railways Board?

The Minister may recall the leader in the Financial Times about the possibility of other schemes. One of the striking things about the list of concerns in the sub-group is that they do not constitute the kind of body that would conduct a close examination of alternative schemes. It is about as solid, reputable and reliable a body as could be found, not the sort of body that would examine the whole of the cross-Channel link in the way in which it might have been examined if a few more interests representing rather wider bodies and industries were on it.

The Financial Times said on 9th June:
Even those who have long regarded a rail tunnel as the better bet look upon the present studies as a matter of ordinary commercial prudence.
The studies to which it referred were the alternative studies. I, too, would regard such studies as a matter of ordinary commercial prudence. Anybody embarking on a project costing at least £400 million or £500 million, and very likely much more before the last invoice comes in, would regard it as normal commercial prudence to conduct an examination of alternatives of the kind that the subgroup and the Government Department concerned have not seen fit to examine.

We are now over the hump of the debate. If I can give the Minister some comfort by saying that, perhaps it might lead him to give a fuller answer on some of the points than he has given hitherto.

Mr. Speed: I shall deal mainly with the amendment, which, with great respect to the hon. Member for Ashton-under-Lyne (Mr. Sheldon), the hon. Gentleman did not touch on. It is a well-designed and well-camouflaged amendment that would wreck the Bill, as I am sure the hon. Gentleman is aware, because he is quite sophisticated in these matters.
However, I shall answer briefly one or the two of the questions the hon. Gentleman asked on the background and why particular groups were chosen. That is dealt with in detail in paragraphs 11.1–11.5 of the White Paper. There is no doubt that the British group combines considerable and reputable financial and


technical expertise—"responsible" was the word the hon. Gentleman used. With a company of the nature of Rio Tinto-Zinc as the project manager, that technical expertise is of a high order.
Th hon. Gentleman could have saved a number of his questions about the shareholdings if he had had a copy of Agreement No. 1, which lists the shareholdings on page 8. They will be repeated in Agreement No. 2, which will be published after that has been signed. They are: Channel Tunnel Investments Ltd., 25 per cent.; Rio Tinto-Zinc Corporation Ltd., 20 per cent.; Morgan Grenfell and Co. Ltd., Robert Fleming and Co. Ltd., Hill Samuel and Co. Ltd. and Kleinwort Benson Ltd., 10·5 per cent. each; S. G. Warburg and Co. Ltd., 5·5 per cent.; the British Railways Board, 4·74 per cent.; Morgan Stanley and Co. Incorporated, The First Boston Corporation and White, Weld and Co. Ltd., 0·92 per cent. each.
The agreement also lists the individual shareholdings of the French sub-group. That has been on the record for over a year.
It is important that one should know the appropriate interests of the different financial and technical houses and the British Railways Board. The effect of the amendments would be to make it impossible for the Government to fulfil that part of the arrangement relating to abandonment of the project. One of the fundamental parts of the arrangements which I should have thought the House of Commons would insist upon and did insist upon on Second Reading is that any party can get out at any time; and there are four parties—the British and French companies, and the British and French Governments. If that were a unilateral act by the Governments when the companies were prepared to go on, obviously compensation must be payable.
Subsection (2) of Clause 1 provides for just that. Therefore, if the amendment were to be accepted, compensation could not be paid, and we should either have to give up our right of unilateral abandonment—which frankly would be impossible given that there is still a major hybrid Bill to pass before we can complete—or accept that the private interests would not sign Agreement No. 2 and

hence the project would be blocked. It may be—I suspect that it probably is—that that is the hon. Gentleman's intention because we know his views about the private interests and the project as a whole.
However, the House having accepted the principle of the Bill, if we were to make it impossible for a party to withdraw at any time we would be placing ourselves in an intolerable situation. I do not think that the hon. Gentleman sought to argue—and I listened carefully to what he said—that the compensation should not be paid if the Government withdrew when the companies did not wish to do so.
The basic arrangements of principle are set out in some detail in Agreement No. 1, and they will be repeated in slightly different form, although the principle is the same, in Agreement No. 2. Therefore, it has been possible for people to query them if they wished. It is a matter of equity. If the companies wished to proceed and the Governments did not, the arrangements which are described in some detail in the White Paper would have to be made.
I must advise the Committee to reject the amendment because if it were passed it would completely wreck the Bill and justice would not be done to the companies if the Governments were to decide to abandon during the next phase.

Mr. Ogden: I wish to make two points.
First, time and again it is said that the alternatives have not been properly considered. It is not my purpose to defend the British companies in the subgroup; they are capable of doing that themselves. However, any company from Britain which supports the project and which wishes to invest large or small amounts of money in it will have considered the alternatives before becoming a member of the sub-group.
Secondly, if my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) is concerned about the expertise which the companies in the sub-group have available, I give the example of a company which I mentioned in the Second Reading debate on 25th October, Robert L. Priestley of Gravesend. As a former coal miner, I know something


about tunnelling companies. Robert L. Priestley is an engineering company which brought machinery over from America and redesigned and rebuilt it in order to construct tunnels under the River Mersey. By the time it had finished the last exercise—the little one, not the big one—of stripping and rebuilding American machinery, we were tunnelling twice as fast and at half the cost as we were previously.
If we had had that equipment three years ago, we might have been drilling the Hong Kong tunnel with British machinery. Because of parliamentary procedures, Priestley has had to wait. It has done its planning and carried out the preliminaries. I quote this example of this company under the supervision of Government and Parliament, being able to provide technical efficiency and the best expertise in the world.

11.30 p.m.

Mr. Sheldon: I fully accept my hon. Friend's comments about the quality of certain individual companies in the subgroup. The point that needs to be considered is that I do not believe there was adequate consideration of alternatives. A group of the kind that we are talking about, largely consisting of financial houses, would not regard as its main consideration what could be done in the way of alternative schemes. Its only consideration is, quite naturally, to see what the Government intend to do, and how the Government intend to reward it for acting in the way it is acting. If it thinks that this produces a rate of return commensurate with its interest, it then decides whether to accept it. That is the kind of consideration that would most likely be given.
I thank the Under-Secretary for his courteous reply. I should like to know what he considers has been the influence by the Department on the membership of the sub-group. Secondly, I should like him to respond to my earlier invitation to say why the membership was weighted so heavily with a number of merchant banks and, in particular, why the American merchant banks were brought in. My third question concerned the old Channel Tunnel Company. What particular expertise did it bring to bear?
I hope that the hon. Gentleman will reply to these questions. I seek only to discover the reason for the nature of what is, on the face of it, not the most obvious combination of companies in the British sub-group. It should be a fairly simple matter to explain why the sub-group came to have the characteristic that it possesses.

Mr. Speed: As I have explained, a great deal of these arrangements was spelt out in some detail in the White Paper. They derived from the arrangements made by the previous administration which, as my right hon. Friend has said, we largely accepted in this respect.
The hon. Gentleman will find in paragraph 11.4 on page 28 of the White Paper an explanation of the situation concerning the public invitation to tender:
three groups submitted proposals. In the event none of these proposals was acceptable to the Governments as they stood, and the three groups were given new guidelines and invited to supplement their proposals either singly or, if they wished, in combination".
Paragraph 11.5 goes on to explain that a new combined group was formed composed largely of members of the original groups.
As I have told the hon. Member, it was both the view of the previous administration, I believe—though I must not put words into their mouth—and is certainly the view of the present administration that the British sub-group involved a reasonable mix of expertise, legal, financial and technical.
Obviously everybody has his own ideas about what is an ideal mix and what companies should or should not be involved, and no doubt the hon. Gentleman has his own ideas about that. With bodies of their repute, incorporating a nationalised industry and a company of the international standing of Rio Tinto-Zinc, I should have thought that the mix of the British sub-group was very good. It has been built up over two administrations. I do not give this as an excuse, but I believe that the views of two administrations will endorse the membership of the British sub-group.

Amendment negatived.

Mr. Sheldon: I beg to move Amendment No. 11, in page 2, line 10, leave out '£30 million' and insert '£5 million'.

The Temporary Chairman: With this amendment it will be convenient to discuss also Amendment No. 13, in page 2, line 12, at end insert—
'Provided that at no time shall such sums bear a ratio greater than that of seven to three to any risk equity capital which has previously been successfully raised for the purpose of undertaking the preliminary work referred to in subsection (1) of this section'.

Mr. Sheldon: We know that the guarantee does not exceed £30 million. The point that I did not understand when I put down the amendment was the one referred to by the Under-Secretary when he pointed out, not the convention, but the actuality that a British Government cannot by Act of Parliament hope to bind a French Government. Even a statement of intent does not normally find its way on to the statute book. It may be that the answer to the amendment is of the same kind, because it deals with a similar factor, but considering the two sides, the French and the British jointly and severally being responsible for each other, I assume that the French legislation has similar characteristics to ours, but it seems to indicate that this joint and several responsibility may meet the point that the hon. Member made in an earlier amendment.
That was my main reason for the amendment. There was, however, a secondary reason—that naturally I would wish the guarantee to be at a lower level, so that greater control could be exercised by the House. The Minister has assumed that I am implacably opposed to the scheme, despite what I say, namely, that my whole point is to ensure a greater scrutiny of the scheme and to see why the Government have moved forward in the way they have.
I would have wished that the Government had found themselves able to re-examine the project in the way that my right hon. Friend urged the re-examination of the Stansted project. If they had done that and found—as a result of that re-examination—that this scheme proved to be the best, I should have had no objection. I merely wanted a proper examination. That is all I have ever said.
It may be that this is the best scheme, but when we have spent £400 million, £500 million or £600 million we owe it to ourselves, to the House and to those

responsible to be able to prove to all reasonably fair-minded people that that money is being spent in the best possible way. My amendment therefore seeks—for the secondary reasons—to reduce the amount only in order that we can obtain greater control.
I do not doubt that in this scheme as in others, if things go wrong the Government will be faced with the temptation, not the inevitability, of having to plunge deeper and deeper. There are few in Governments of determinate life who are brave enough to cancel a project. They leave it to their successors to incur the odium. This is a principle that the right hon. Gentleman will probably recognise. It is up to the critics of such schemes to bring to the attention of this Committee that characteristic of all Governments, so that at any rate the House and this Committee can attempt to control some of the profligacies of which all Governments the guilty. My secondary reason concerns parliamentary control, and I should like to have the hon. Gentleman's reply on that aspect.

Mr. John Sutcliffe: In the context of my amendment No. 13 I have to refer to Chapter 4, paragraph 4.6 of the White Paper, which refers to the suggestion that
sea ferries might compete for a time on the basis of charges reduced in real terms by 45 per cent. rather than the 30 per cent. assumed in the studies.
It is important for us to recognise that the sea ferries confidently forecast that they will compete at a level of fares 45 per cent. below the 1973 level, and they say that this competitive response will not be short term. In fact, by 1980 the ferries expect to be in a position to offer a return fare by sea for a car with three passengers of £23.20 at 1973 prices, while according to Annex 7 of the White Paper the comparative tunnel return fare is likely to be about £34. The important question is: how long at this level of charges will the ferries be able to maintain competition?
The White Paper—again in paragraph 4.6—states
This could only be a short-term position as the fleets would not be earning enough to cover long-term costs.
The ferry operators strongly challenge this assumption. They are confident that


a 45 per cent. reduction will leave them with a reasonable return, and that they will be able to compete not just for five years but for 10 years. The tunnel revenues are based on the expectation of capturing four-fifths of the holiday traffic. If that expectation is upset, it is in the early years that tunnel revenues will be hit; and the early years are the crucial years, because in the later years tunnel revenues have to be heavily discounted.
In my view, the financial rate of return on the tunnel project could well fall more dramatically than the Government's assumption of, at worst, 2½ per cent. It is a question of judgment. Who will be right—the commercial ferry operators, or the Government and their advisers? This is a serious conflict of opinion. Both cannot be right. We have to face the possibility that the Government's calculations may be sufficiently wrong to make the tunnel project a highly speculative venture, and for this reason in phase 2 the project ought to be put to the test of the market more rigorously than the Government propose.
We have been told that private interests expect to raise £8 million of the £30 million for which this Bill provides; that, by the end of phase 2, 30 per cent. of the total expenditure to that point should have been met by risk capital. This amendment is not a wrecking amendment; it is a very reasonable one. A ratio of seven to three, as the amendment proposes, is the ratio proposed by the Government. It would be the amount that the Treasury could guarantee at any time during phase 2, and it would be related to the equity capital successfully raised by the sponsoring companies. This would effectively enforce on this project the direct influence of the open capital market. For each £7 of Government guaranteed loans to be raised, the sponsoring companies would first be required to show that they had already raised £3 of true risk equity.
Only in this way will it be possible to demonstrate that the open capital market has any degree of confidence in this project. At the same time, it will protect the taxpayers from the possibility of an escalation of involvement, in the event that private interests cannot be prevailed upon to put up the amount of true risk equity required. This is in

contrast to the loose provisions of Channel Tunnel Agreement No. 1, under which the Minister could permit an extension of time beyond nine months, in order for the obligation to raise the 30 per cent risk capital to be met. Alternatively, under the agreement the Minister could reduce the 30 per cent. risk element to 10 per cent. in the light of market conditions.
If the market will not respond in the proportion proposed, it will have given a damaging verdict on the tunnel project. In this event, it is only right that Parliament should decide whether the taxpayer should bear any greater burden than the 70 per cent liability proposed, which is substantial enough by any reckoning.
My amendment accords with Conservative Party philosophy, preferring commercial judgment to bureaucratic judgment and favouring private involvement before public involvement. I hope that my right hon. Friend will not reject it out of hand.

11.45 p.m.

Mr. Peyton: First, may I say to the hon. Member for Ashton-under-Lyne (Mr. Sheldon) how much I welcome the possibility—I cannot think that it is much more—that he is not after all implacably opposed to the scheme?
I come back to the matter which we have discussed on a number of occasions, that it is difficult if not impossible to go on re-examining projects of this kind. In this case, it has taken many years of preparation to get it to the stage that it has now reached. It has also cost a great deal of money. To go back over that ground again, to spend money on similar researches, would be to indulge in that habit which seems to have grown up in this country of longing to pore over projects, to look at them again, and somehow or other to dredge up some excuse by which we might avoid any decision.
The effect of both these amendments is to limit the amount of guaranteed funds which can be raised. In intention, Amendment No. 11 would simply mean that, instead of Parliament approving the finance expected to be needed during phase 2 with a fall-back power to increase it, an order would be needed very shortly to provide the necessary funds to keep


the project going. However, in effect, probably it would mean that the French Government would have to guarantee more than their share, though we would share that obligation with them. But I doubt whether either side would find that situation acceptable or tolerable. Moreover, if our payments to the French were also limited, we would not be able to sign the agreement or the treaty.
Even in its intention, I suggest that the amendment is not acceptable. The companies will not sign and put up the money if they have the prospect of Parliament continuing to want another bite at the cherry every month or so, despite the fairly large hybrid Bill that the Government intend to introduce within a matter of weeks.
I come, then, to Amendment No. 13. I shall not risk your displeasure, Mr. Johnson, by taking up the argument of my hon. Friend the Member for Middles-brough, West (Mr. Sutcliffe) about the rival profitability of the ferries, which cannot be said to fall remotely under this amendment. I accept what my hon. Friend says. It is a matter of commercial judgment. It is not a matter of whether it is the judgment of bureaucrats or of commercial people. There are some civil servants who now advise me on the project, but there are many commercial people. My hon. Friend should not forget that. Their reputation is staked in support of the project. He should not suggest that all commercial judgment is on the same side. That is far from the position.
The effect of my hon. Friend's amendment would be to require that at no time should the risk capital paid be less than 30 per cent. of the total expenditure to date. But under Agreement No. 2 the companies would have flexibility to defer the putting up of their risk money so that the situation in which risk capital was less than 30 per cent. could come about.
If the amendment were carried, Agreement No. 2 could not be signed. There is private risk money of various scales in the Channel Tunnel project. Just under 50 per cent. of phase 1 was private risk money and between 10 per cent. and 30 per cent. of phase 2 will be private risk money. There will be a minimum of

10 per cent. overall. It is the companies' intention to put up the £8 million contribution to phase 2 as soon as possible after the phase begins, if only because it is in their interests to do so.
At the time of signing Agreement No. 2 the risk money will be £2·6 million. That is 30 per cent. of the £8·7 million. At the time of signing the agreement, work costing perhaps £7 million, taking phase 1 and the interim period into account, will have been carried out or committed. That implies only a short move into phase 2 before the 30 per cent. ceiling sought by the amendment is passed.
I recognise the point which the hon. Member for Ashton-under-Lyne and my hon. Friend the Member for Middlesbrough, West have in mind, but I could not possibly advise the Committee to accept the amendments as they would have a damaging, if not a wrecking, effect upon the whole project.

Mr. Roger Moate: I am a little puzzled by the debate which we have just had. I have one particular point to put to my right hon. Friend as well as a number of more general points to make in response to certain of my right hon. Friend's opening remarks.
I understand that there is no obligation on the private companies to raise their proportion of the £30 million. I should be grateful if my right hon. Friend will elaborate a little further. If the taxpayer is being called upon specifically to guarantee £30 million or £35 million, there should be an equal obligation on the private companies to raise their proportion at this stage.
I was attracted by the argument put forward by my right hon. Friend the Member for Middlesbrough, West (Mr. Sutcliffe) about this being an opportunity to test the merits of the project. I do not think that my right hon. Friend has at any stage gone into the matter at sufficient length to explain why a project which is put forward as being so eminently profitable should require massive Government backing. He may feel that it is a persuasive argument to some that the massive sum should be required as it was put forward by the Opposition when they were in power. That does not appeal to me as a particularly strong


argument. My right hon. Friend was damning the case with faint praise when he put forward such a thin argument to justify the way in which the project is being financed.

Mr. Peyton: I was answering the point raised by the amendment and I was confining myself to that point. I was not attempting to deal with the much wider and general points as to whether there should be private finance.

Mr. Moate: Maybe I was straying from the point made by my right hon. Friend. I still stick to my general point that we have not really had a proper examination of the financing of this project. The type of exchange we have had forcibly demonstrates the need for, at the least, a Select Committee, to examine the project. I agree that the amendment offers an opportunity to test the market. It would place an obligation on the private companies to go ahead and raise more risk capital at this stage. That will test whether the projections put forward in the White Paper are right in the eyes of commercial interests.
My hon. Friend the Member for Middlesbrough, West mentioned the question of the fare projected levels. Many would argue that the ferries could operate more competitively and retain a large amount of business. There are other factors, such as the inflation that is built in. The inflation figure built into the cost projections is 5 per cent. That is a remarkably confident figure to predict. I should be interested to know what the likely inflation rate is for the next few years and what effect this will have on the confidence of investors in putting in the money without there being Government guarantees.
These are important questions to which we should have answers. The same uncertainty is raised over the question of interest charges. These have risen considerably since these projections were first made. This is another factor which could send the cost escalating much higher than the figures we have so far had. My right hon. Friend has been a bit scathing about accepting the type of parliamentary control which these amendments suggest. It may be that they are not in exactly the correct form, but I feel that we must

have some greater measure of control over this project as it moves forward.
My right hon. Friend used the phrase "hiccups of doubt". He said we cannot have these. But the hiccups of doubt of the executive are the very breath of light to parliamentary control. When this project was first mooted the cost was £160 million. Over seven years it has risen to £850 million and will be more. We would have had to have a few hiccups of doubt if the construction had started seven years ago and we had reached the point where it was five or six times greater than that figure.
I believe my right hon. Friend believes very much in there being proper parliamentary control and scrutiny in these matters and I hope he will offer the Committee some assurance that we will have regular control over them, that we will see these guarantees and perhaps have a chance to comment on them. I am sorry he cannot find some way of accepting these amendments, particularly that which would give us that measure of parliamentary control.
The Government should have come forward with affirmative orders before these guarantees were issued. I also believe that not only must the Committee and House exercise proper scrutiny but that the public should be more greatly involved and that there should be a public inquiry. That is not in the amendment. In the meantime, this amendment has much to commend it. My right hon. Friend ought to give us more detail about future costs. I hope that my hon. Friend will persist with his amendment.

Mr. Kenneth Warren: There is considerable worry over some of the points my hon. Friend the Member for Middlesbrough, West (Mr. Sutcliffe) has raised. When I raised this subject three weeks ago and posed some questions to my right hon. Friend about tariff levels and the targets set there was no reassurance in his reply. There was no comment at all on the questions I had posed to him. I feel that the price target set for this venture is far too high.
12 midnight.
There is no "fat" whatever to accommodate the projections of the ferry operators who have already said they can operate substantially below the Channel


Tunnel prices that have been postulated. But one can bet one's life that they have a lot more "fat" hidden away to allow them to cut prices when the competition comes. The cross-Channel ferries operate what must be the world's most expensive ferry service and they have never been challenged by any other form of transportation on the scale of the Channel Tunnel. This is very worrying.
If we have a situation in which the Government do not want to accept the wider range of probing that some of us think is necessary, it brings into doubt whether the Government are right to have such a large single component of the total operation falling as costs and charges on their doorstep. The room for manœuvre appears to be far too small. Therefore, although I have some doubts about the amendment, I hope that the Minister will give us more reassurance about the costs which have so far been proposed.

[Mr. E. L. Mallalieu in the Chair]

Mr. Sheldon: I am sorry that the right hon. Gentleman has decided not to reply to some of the points which have been raised, because they reinforce a great deal of the debate that has been taking place among those who are interested in these matters.
The hon. Member for Faversham (Mr. Moate) asked why the private interests were not involved with their own money in the guarantee of £30 million. If they had been involved in that kind of money, we might have seen a greater test of the scheme than we have seen so far. What is quite clear is that they would not be so stupid as to chance their money in this sort of way on this basis.
The hon. Member for Hastings (Mr. Warren) spoke of the position of the Channel ferries. On the question of charging, he was right to say that there is a great deal of "fat" in the profit of the Channel operators. Of course, they can be squeezed considerably. Those profits exist and the question of charges some 45 per cent. lower by the ferries could well be met. As the hon. Gentleman said, the ferry operators and the Channel Tunnel operators cannot both be right; one will be right and the other wrong. But there is a difference in what will happen to them. If the tunnel company

is right the ferries lose money, but if the ferry operators are right the tunnel still goes on. One is a capital scheme with large sums of money introduced to make this tunnel. If it is not successful, one does not scrap the tunnel as one will scrap the ferries. One does not take into account the large capital sums that have accrued and one reduces the charges so long as they cover operating costs.
The tunnel is at a lower level of operating profitability because, if the worst comes to the worst, the Government will find themselves having to write off the amount of their capital that has to be written off to make the Channel Tunnel pay. It is this kind of competition the ferries will encounter—not the competition that takes into account the capital cost, the cost of writing down the capital, amortisation, and so on. The eventual competition, if the ferries are competitive enough, will mean a level of competition that may just be above the level of operating costs.
Therefore, if and when the Government make this kind of decision, they will be in difficulty because they will be under some compunction to reduce that loss on the Channel Tunnel, and to reduce that loss they may have to start providing the roads and the rail, changing the operating charges, and so on, in the manner that I described on an earlier amendment.
The hon. Member for Faversham was right about there being great doubt in Parliament and outside on the viability of the scheme. That doubt can be resolved only by a further consideration in some detail.
The Minister said that we cannot go on re-examining these projects. He must realise that he has it wrong. We have not re-examined this project once. We have had only this Channel Tunnel—nothing else. The right hon. Gentleman has not come to the House with anything other than that, and even the information on that project has been remarkably limited.

The First Deputy Chairman: Order. The hon. Gentleman is talking about matters which are outside the scope of the amendment.

Mr. Sheldon: I shall be guided by you, Mr. Mallalieu. I was referring to Amendment No. 13, not No. 11, to which you


may have thought I was addressing my remarks. I was referring in Amendment No. 13 to the sums bearing a ratio that includes an element of risk capital. If there is this clement of risk capital then it would be a viable scheme. The viability of the scheme has been referred to by a number of hon. Members and it is to that aspect that I am referring. If the scheme is viable the risk capital can be introduced.
The Minister, strictly in order, said that we cannot go on re-examining these projects. I say that we have not re-examined these projects. There has been what the Financial Times called a lack of commercial prudence in not considering other alternatives. This is the main charge that is laid against the right hon. Gentleman and the Department, and it is a charge that continues.

Amendment negatived.

Mr. Sheldon: I beg to move Amendment No. 14, in page 2, line 16, leave out '£5 million' and insert '£10 million'.
This amendment clearly deals with control. It is not concerned with the other matters involving problems of joint and several responsibilities, so a lower sum is inserted. This proposal deals only with the need for the control of public expenditure. In effect, it asks why the figure is £30 million, what it includes and why it cannot be a lower figure that would allow us a greater degree of control. The £10 million represents in part a paving amendment to new Clause 1.
The argument here concerns the control which we discussed on the last amendment. As these debates proceed my realisation of the need for this kind of scrutiny grows. I had expected that in Committee a great deal of information would be produced in readiness for these rather more detailed debates than any we have achieved so far.
Despite the Minister's courtesy, it is clear that a great deal of the information which I had assumed, and still assume, was available to the Department is either not available or is not to be made available to the House of Commons. That does not reduce the need for greater scrutiny. On the contrary it makes us realise more fully than ever what we are doing tonight. When we come to consider the new clause we can deal with

this matter in more detail and perhaps discuss some of the mistakes that were made in the past.

Mr. Speed: I shall not discuss the new clause, because my right hon. Friend will deal with that in due course.
This is not just a question of the resources available to the hon. Gentleman in drafting the amendment being slightly inferior to those of my Department. What the amendment would do may be very different from what the hon. Gentleman intended.
The effect of the amendment would be that the British Government with the French Government could guarantee up to a total of £30 million. However, if the project were abandoned and the guarantee were brought into effect, the British Government could, under subsections (1) and (4), pay out up to £15 million on their own account and a total of £30 million provided they were reimbursed by the French Government for sums paid out beyond £15 million. But if the French Government were called upon to meet our joint obligations, rather than the British Government, we could not reimburse them up to the full 50 per cent. of the total as envisaged under the treaty.
The hon. Gentleman knows, from the discussions that have taken place tonight, let alone on Second Reading, that the project and the obligations are to be shared 50–50 between the two Governments. The effect of the amendment would be unfair, because the 50–50 obligation would not apply. When I read the amendment I wondered whether the hon. Gentleman had some misunderstanding—as he had on an earlier amendment—about the relative positions of the two Governments. This may be a paving amendment, but it seeks to nullify the 50–50 sharing obligation and, therefore, to nullify something which everybody accepts as of great importance in the Bill.
The hon. Gentleman will no doubt argue new Clause 1 on its merits, but I must tell him that I could not advise the Committee to accept this amendment since it would completely destroy the 50–50 obligation which is so essential.

Amendment negatived.

Question proposed, That the clause stand part of the Bill.

Mr. Sheldon: There are a number of matters which require at least a brief examination. The Bill seeks to provide a guarantee for an arrangement made between two countries. Because there are likely to be a number of Bills of this kind in future as more arrangements such as this are entered into, there are a number of general observations which might reasonably be made.
I shall restrict myself to one observation about the passage of Bills in both Houses of Parliament. I have no knowledge of French legal matters. My knowledge of British legal matters is limited enough. We can, however, agree that the relationship between the two must be close and identifiable. What strikes me is the thought that no one in the House has the faintest idea of the nature of the French legal guarantees.
12.15 a.m.
That is a considerable omission. We are tying ourselves down very closely but we have no knowledge as to the degree of commitment, in the precise terms that are given by a Bill, that the French Government have entertained. The Government may reasonably say "This is none of our business. Our business is to ensure that we have the legislation that we require. As against our opposite numbers, the French, treaty obligations are sufficient for that particular purpose."
That might be taking too narrow a view of the kind of relationship that will be fostered, either through the extension of the Community or because of the greater number of such measures that might place us in a position in which we shall need to know something more about the details of the French provisions than we know now. I should be grateful if the Minister would mention something about that.
The other general observation that I wish to make concerns major projects. The Minister condemns those who carp at major projects. But we know two things about major projects. First, we do not seem to get them right, which is a fairly damning indictment of our method of operation. Secondly, they last well beyond the lifetime of one Parliament. It is not enough for a Minister in such a situation to say that these are matters that he inherited from a previous Government. When dealing with 10-year

and 15-year projects the difficulty is that we have only a five-year Parliament. Faced with five-year Parliaments, responsibility can be less acute than most hon. Members would wish.
When talking about long-term projects and large-scale projects, it is not enough to brush aside criticism, as the Minister seemed to be doing, to have one's head down and to talk about getting on with the job. The real question is how the House of Commons is to maintain some degree of control over projects which, once started, cannot be altered but which will be carried on whatever Government are in office. The only way in which this can be done is by means of bipartisan policies.
I am not in favour of bipartisan policies generally. However, projects such as Concorde, Maplin and the Channel Tunnel essentially need to be based on bipartisan policies. When we have commitments which stretch so far into the future that we know, with the degree of certainty that these things permit, that Governments of both political complexions will be involving themselves in decisions crucial to the operation of the particular project, it seems that the simplest precaution that we should take is to ensure that there is some broad measure of agreement between both sides. That is not what happened on this occasion.
Britain is guaranteeing these sums of money, and with one side committed to a guarantee that will have implications right into the next decade it would seem that certain concessions should be made. The concession required by the Opposition is the simple one of investigation. I should not have considered this too great a price to pay for the kind of bipartisan policy that would have given the go-ahead to some form of Channel link even though ultimately it might not have been precisely the scheme that the Government had in mind.
The Minister has seen an increasing division between the two sides. It should have been his responsibility to try to bridge that gap.

The First Deputy Chairman: The hon. Member seems to have forgotten that the Bill has been read a Second time.

Mr. Sheldon: The only point I make is about the guarantees, Mr. Mallalieu. The guarantees, which are an essential part of the clause—the very kernel of it—are matters upon which the Opposition and the Government disagree. That disagreement, I maintain, could have been avoided if the Minister had approached the subject in a different manner. It is with great regret that I say that in this matter there has been division which could readily have been overcome.
My next point concerns the repayment of private interest. I understand that when the right hon. Gentleman spoke before about the payment of interest he said that the Government were adopting the normal way of doing such things. Since then he has heard the hon. Members for Faversham (Mr. Moate) and Middlesbrough, West (Mr. Sutcliffe) suggest that there should have been a great private commitment with risk capital coming in even at this stage in the programme. If that is so, it reinforces my argument that at any rate interest need not have been paid. I do not think it would have been possible to obtain private risk capital at this early stage. But if an argument can be made for it now, it is possible to argue at least as forcibly that interest payments are not necessary.
I should dearly have liked to welcome the clause as dealing with the widest aspect of the Channel Tunnel link. It is restricted and I must oppose it for that reason.

Mr. Peyton: I shall deal first with the last point made by the hon. Member for Ashton-under-Lyne (Mr. Sheldon). The work we are here concerned with is estimated to cost about £30 million, of which it is expected that the Governments will guarantee about £22 million, the remaining £8 million being raised by the companies as risk capital. In addition it will be necessary, as I have explained, during phase 2 to refinance £2·8 million of the guaranteed funds out of a total of £5·4 million for phase 1.
The clause provides the British Government with the statutory authority necessary to enable them to meet the financial commitments undertaken by them in conjunction with the French Government in phase 2. Even at the risk of straying slightly from this narrow issue, I think

I should answer some of the points that the hon. Gentleman raised.
It is not possible for me to intervene in detail on the form of French law. I am content—indeed, I would have to be content in any event—with the obligation which the French Government and ourselves will undertake in the treaty. I should be surprised to receive inquiries from my French opposite number about the form of legislation we were undertaking in the United Kingdom Parliament, with the French expressing doubts about whether it was adequate to enable us to perform our treaty obligations.
The hon. Gentleman went on to deal with the major projects as a whole and issued the rather blanket condemnation that we do not seem to get them right. He pointed out, which is a little more germane, that major projects last well beyond the lifetime of one Parliament. He accused me of brushing criticism aside and stated that continuity was obviously a problem for everybody when there was the limitation of five-year Parliaments.
I accept all this, but it is a little harsh to blame the present Government for lack of continuity when what they have done is to pick up precisely, though the hon. Gentleman was blaming me for this earlier, the plans which were left by our predecessors. That is not always a very sensible course of action, I admit, and I should by no means wish to do it without very careful thought. However, I am not unduly dogmatic and I think that the previous administration laid down plans which were tolerably sensible and which we could well adopt.
To blame the present administration for lack of continuity and for failing to get the agreement of the Opposition, when what the present administration have done has been to pick up the very plans which the Opposition made when they were in government, is to fly in the face of common sense, facts and everything else.
I shall not go into questions of our policy for joining Europe, trade unions or anything like that. One is accustomed to a fair measure of tergiversation on the part of the Opposition, but never have I found the lack of recognition of it so clearly evinced as by the hon. Gentleman tonight.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

New Clause 1

REVIEW OF PROGRESS OF PROJECT BY SELECT COMMITTEE

Before £20 million has been spent under the guarantee under section 1 of this Act a Select Committee of the House of Commons shall be appointed to examine the progress of the project.—[Mr. Sheldon.]

Brought up, and read the First time.

Mr. Sheldon: I beg to move, That the clause be read a Second time.
The clause should command the support of all hon. Members and be accepted by the Government.
The Minister condemned the Labour Government for their change of heart over the plans they left behind. It is not for me to defend the previous Government when I was a critic. The present Government do not go through with the project to fruition. It is perfectly acceptable for any Government who cannot see a project through to the end to accept some degree of House of Commons control. I do not find it deplorable that a party, having initiated such a project and seen another Government continue it, should then say that a Select Committee should examine it. That is to exercise the necessary degree of control.
12.30 a.m.
Large-scale projects cannot be left to alternating Governments to continue themselves. That is to hand over too much of the decision making to the only continuous part of the Government machine—the permanent officials. There may well be half a dozen or more Ministers during the lifetime of the scheme. Therefore, the continuity that the House would wish must be found by other means. I want to see that continuity coming from the Government, the Department and the House. The main force must be the Government, and their instrument must be the Department, but to achieve continuity and a bipartisan policy the House must be slotted into the discussions and debates.
Long-term proposals involving the expenditure of large sums call for new methods of control, including control by the House. One is the use of the Select Committee procedure. It is not the only one; other bodies could inquire into such matters. But we are at an experimental stage of our examination of such projects. The advantage of the Select Committee system is that it enables changes to be made in the composition and possibly the terms of reference to the Committee, so that a close and continuous control may be kept of the expenditure of the sums involved.
If Governments had taken more people into their confidence they would have achieved a greater measure of trust and other methods of operation might have been possible, but now it is a bit late in the day for that. The only solution acceptable to the House is a Select Committee. It could go into such questions as the operation of the Channel ferries, finding out the basis of their costings in a way that the Government had not done. I do not think Governments know.
I do not think that the Minister knows by how much the cost of ferries could be reduced as a result of intense competition. But, as the Monopolies Commission is reporting, he may well feel that there is no great need to examine this matter now, and I would not blame him for that. There is a number of factors, however, which the Select Committee could take into account. I should dearly like to see carried out an examination of the sub-group and the structure and confidence it might engender in those who decide to let it take over the main construction work of the tunnel.
It is a great pity that the Minister did not give this proposal the welcome it deserved. It is something we shall have to have in future projects of this kind; and it may well be that the tame acquiescence which has been achieved in some projects will not be so easily obtainable, given one or two possible failures which may yet occur because we have not learned how to organise them.

Mr. Warren: The new clause is a late starter. In fact, it is far too late a starter to produce the management standards required of such an enormous project as the Channel Tunnel. The hon.


Member for Ashton-under-Lyne (Mr. Sheldon) said that what was required was to exercise a degree of control over the project commensurate with its magnitude. That would be to look only superficially at the problem, because the key to the success of this project lies in the standard of project management deployed from the start. To wait for £20 million to be spent before setting up a Select Committee would do nothing other than to give an observation point from which one could see what was going on without any executive control over the project. When £20 million has been spent, probably £100 million is already committed. It is then too late.
I am concerned that we have heard nothing about the type of management which will be involved in the project. When the Americans went for the United States Navy Polaris programme, they set up a parallel programme which produced a whole project management system to make sure that the Polaris programme was completed on time to the cost schedule required and to meet the targets. This project system has since been used repeatedly in the United States and to a certain extent in this country. I hope that the Government will look on this project as demanding a new revolution in management planning techniques.
It would be of immense benefit to find such a management scheme. In the 1950s we talked in terms of tens of millions of pounds. In the 1960s we talked in terms of hundreds of millions of pounds. Now we are discussing a project cost bordering on £1,000 million. But our management standards and techniques have not moved forward at the same rate. That causes me considerable concern. I hope that my right hon. Friend the Minister will say that the money involved in this project will be controlled in such a way that the House of Commons does not have to wait for a Select Committee but will have a continuous, clear, visible plan before it against which it can measure the progress made.
Finally, with the hon. Member for Ashton-under-Lyne leaving the Chamber, I should like to say that we are faced with the most extraordinary sight: we have no Opposition before us. Even when the hon. Member returns into the House, he is unaccompanied by any

member of his own Front Bench to support him.

Mr. Moate: It is encouraging to hear from the hon. Member for Ashton-under-Lyne (Mr. Sheldon) that the Polaris programme met its targets. That is a good example for our own defence sector, if not for hopes of proper control over public spending.
I do not think the hon. Member's suggestion that a Select Committee would be too late is correct, because the philosophy of phase 2 is that it is an exploratory phase and one which should give time for further re-examination and, if necessary, time to pause and think again. That is presumably the object of it. It is quite logical also that half way through that phase, when £20 million has been expended, the House should examine the whole project in the light of the work which has been done and of the figures which had been made available. A Select Committee would be an effective way of probing some of the facts and figures we have been given.
I suggest to my hon. Friend the Under-Secretary that there is a way of accommodating the genuine desire for parliamentary scrutiny without in any way harming the Bill, if it is passed, and without in any way slowing down the project. One could proceed to phase 2, have the Bill and at the same time, without delaying the project, establish a Select Committee to examine the fundamentals, principles and costs, as opposed to the type of Select Committee one gets with a Hybrid Bill, which is an altogether different animal. The Select Committee could be set up concurrently with the work being done under phase 2. The same argument applies to a public inquiry.
These are genuine demands for information and scrutiny. It may well be that the answers would satisfy all the critics and that a Select Committee would show the figures to be correct and the project to be rightly based. For people such as myself who have two views about the project—I am in favour of a railway-only tunnel; I have my doubts about this tunnel—a Select Committee might provide the answers to satisfy both sides of the House and the critics. This could be achieved at the same time as phase 2 was under way.
I ask my hon. Friend sincerely to give thought to how he can satisfy this genuine parliamentary demand for proper scrutiny of the project.

Mr. Speed: The hon. Member for Ashton-under-Lyne (Mr. Sheldon) said earlier that we thought the new clause was deplorable and we deplored the idea that we might have a Select Committee of the kind that is proposed. I assure him that I do not think it is deplorable and I understand some of the concerns he has expressed, as I understand those of my hon. Friends the Members for Hastings (Mr. Warren) and Faversham (Mr. Moate).
I certainly agree with my hon. Friend the Member for Hastings that we are moving here into management fields that demand great expertise and skill, although, when he speaks of our being nearly into 1974 and of this being a great new engineering project costing more than £1,000 million, I must remind him that during the last 10 years or so there have been many projects in different parts of the world of comparable size and nature and in some ways of rather more advanced technologies than in the case of this project.
As for project management, as far as the United Kingdom is concerned RTZ Development Enterprises has a record second to none in many of these directions. I am sure my hon. Friend was not suggesting that it would be inadequate for management control.

Mr. Warren: Naturally, I would not cast any imputations on that excellent company. Where the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and I have sympathy for each other on the subject of project management, however, is that there is not clear evidence from past records of projects of this magnitude anywhere in the world that cost and time control have been effectively managed. That was the danger on which I was commenting.

Mr. Speed: That is one of the reasons why the risk capital element is important and one of the reasons why paragraph 11.7 in the White Paper, which no doubt my hon. Friend has read, is also important, because there are considerable financial advantages in having efficient and expeditious management of the scheme.

12.45 a.m.

Mr. Moate: If the risk element is so important, why is it only expected that these sources will contribute in phase 2? Why is it not demanded that they should contribute?

Mr. Speed: We have been through this already earlier this evening. It will be anything up to 30 per cent., as has been explained, under phase 2, and if we can get the Bill enacted and the agreement signed my hon. Friend will see considerable payments of this money coming forward. We expect that it will be up to £8 million.
I want to deal with the new clause, which has nothing to do with the argument that we have been having. As my right hon. Friend suggested in the Second Reading debate, it might be advantageous for the Governments of the two countries to run this project and have no risk capital. When we have spent £20 million it would be advantageous and desirable, and it would give us all the control that my hon. Friend seeks, to have this Select Committee.
As the Committee knows, very shortly there will be brought before the House this major Hybrid Bill, in which we shall seek the powers needed for the construction, financing and operation of the tunnel. This will be subject to the normal procedures of the House, including detailed examination in Select Committee of those aspects affecting private rights and interests and in Standing Committee of the general provisions of the Bill.
I must emphasise that the way in which some hon. Members have spoken would indicate that virtually no information has been given and that this has been sprung upon the House without warning. In fact, we have had a debate on the White Paper, we have had this debate, and there are to be the debates on the major Bill. There have been stacks of documents and as my right hon. Friend has made clear, localy authorities and local people in Kent—who, I agree, have a legitimate interest in this matter—are to be constantly informed on the progress of the scheme.
As for the work to be carried out during phase 2—a matter that is germane to the new clause—this, together with a basic breakdown of the budget,


will be set out in agreement No. 2, to be published with the treaty early next week. The main item is the construction of sloping access adits on both the British and French sides and the driving of some 2 km. of the service tunnel on each side. There will also be surveys and studies of conditions below ground, design projects and the preparation of the main works and, in addition, the updating of the economic and financial studies.
A vast amount of work has already been undertaken and its results published. We now have these mountains of documents in various libraries in the land, and the House and its Committees have and will have the benefit of these and of the various studies, as they emerge under phase 2, of the preliminary works and the results. There is no question of our hiding our light under a bushel, or hiding vast amounts of information. In the near future a basic breakdown of the works and the budget itself will be published.
I cannot accept the criticism made by the hon. Member for Ashton-under-Lyne that, because Ministers sometimes came and went and Governments come and go whereas civil servants stay, we constantly need Select Committees to keep an eye on the project. It so happens that my right hon. Friend has now been Minister for three and a half years. Nevertheless, it is a pretty poor opinion of Ministers to suggest that if my right hon. Friend went to another position anybody else would therefore be immediately all at sea and that we would have to sort out the position by way of a Select Committee.
If, after the expenditure of £20 million, Governments did not keep the House fully in the picture, and if the House were not kept in the picture as a result of these studies, there would be considerable force in what the hon. Member says, but that is not the case. I repeat—if the Committee needs any further assurances—that as these studies go forward under phase 2 we shall keep not only the House but the country, and local people who have legitimate fears and problems, very fully in the picture, so that they can see exactly what is happening.
I must also remind the Committee, as I have reminded it on a number of occasions tonight, that this project can be broken off at any time by any of the four parties. Therefore, as I said on Second Reading, there is no irrevocable commitment—and this must be stressed again and again. I do not believe that our normal procedures in this Parliament are inadequate and, in view of the assurances that the Government have given about keeping everyone informed, I do not see any advantage in the appointment of an additional Select Committee of the sort that is proposed. I can certainly assure this Committee that, with the Hybrid Bill shortly coming before the House, many of us will be deeply involved in all these questions for a considerable time to come.

Question put and negatived.

Bill reported, without amendment.

Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time, and passed.

Orders of the Day — LAND TENURE REFORM (SCOTLAND) BILL

Order for Second Reading read.

Ordered,
That the Bill be referred to the Scottish Grand Committee.—[Mr. Clegg.]

ADJOURNMENT

Motion made, and question proposed, That this House do now adjourn.—[Mr. Clegg.]

Orders of the Day — TEACHERS' SUPERANNUATION (MR. T. McKIE)

12.52 a.m.

Mr. David Waddington: Mr. McKie, who is one of my constituents, is a teacher and the headmaster of a Roman Catholic School in Burnley. Apart from war service he has spent his whole adult life in the teaching profession, and it is about his pension rights that I rise to speak tonight.
It has long been acknowledged that war service should count towards a teacher's pension. Indeed, the regulations are so widely drawn that it is not only a person who taught before the war and went back to teaching after the war who is credited with contributions throughout the whole of his war service. A man who spent only a week in teaching before the war and who went back to teaching after the war is also credited with contributions. Indeed, a man who spent no weeks in a college or in teaching before the war but who had been accepted for entry into a teachers' training college before the war is also credited with contributions.
The reasoning behind that approach was explained by my hon. Friend the Under-Secretary in a letter dated 14th September this year. It is that a person who applied to enter a college before being called up had thereby demonstrated a clear intention to enter the teaching profession and had shown that, but for the war, he would have entered the profession earlier. All that is fair enough and easily understandable. Bearing in mind the Department's reasoning and its policies as so explained in that letter from my hon. Friend, I should like now to refer to what has happened to Mr. McKie.
Between 1933 and 1939 Mr. McKie taught in a well-known school in Ceylon. During that period he obtained a teaching diploma and also an external degree at London University. In August 1939, before the war broke out, he decided to return to this country in order to obtain a teaching post here. He left Ceylon in the August and arrived here on 3rd September, the very day on which war broke out. He made what can only be described now as a very sad mistake. Instead of applying for a teaching post and then waiting to be called up for one of the Services, he decided to volunteer for service. If he had taken a teaching post, for which he was well qualified, for only a fortnight, all would have been well. Because he did not do so and because, rather than wait to be called up, he decided to volunteer for the Royal Air Force, he is now told that none of his war service is reckonable for pension purposes.
Mr. McKie is not suggesting that his Ceylon service should be reckonable for pension purposes. He is not suggesting that because he was teaching in Ceylon for six years before the war he should be put in the same position as a person who was in pensionable teaching service in this country between 1933 and 1939. He is saying that it is patently absurd that he should be put in a worse position than a person who merely applied for entry into a teachers' training college in 1939 and that he should at least be put in the same position as such a person.
One has only to state the position in the way I have done so to recognise that it is a complete absurdity and, now that the position has been explained to my hon. Friend, I am sure he will do his best to put matters right. I do not ask him to do that tonight. Obviously he will want to look at the machinery involved and to examine carefully what would have to be done to put matters right.
To make the necessary changes so that justice may be done to Mr. McKie is nothing like as difficult or as big a task as it might seem at first sight. In a letter to Mr. McKie sent by the Ministry on 21st May this year, it was stated categorically that the Minister was bound by the terms of the Teachers Superannuation (War Service) Act of 1939 and, although this was not said explicitly, the inference from the letter was that Mr. McKie was asking for the impossible, suggesting that an Act of Parliament should be repealed to suit his convenience.
That is entirely incorrect. I spent an hour or two in the Library of the House investigating the position. It turns out that the position is entirely different from that which seemed to be suggested by the Ministry at that juncture.
The 1939 Act was repealed in 1965. The 1965 Act was repealed in 1967. The 1967 Act was repealed in 1972. Somewhere along the line a great change in the law was brought about. Instead of the criteria governing those to whom war service should be credited for pension purposes being written into an Act of Parliament, the law was changed drastically and the matter was put into the hands of the Minister, who by regulations alone could determine who should have


his war service reckonable for pension purposes and who should not.
The matter has nothing to do with the 1939 Act. It has nothing to do with any Act. It is within the power of the Minister to put right this obvious injustice tomorrow by regulations if he is so minded. There has been a torrent of regulations during the past few years. There has been the bundle which I have before me during the past 18 months. It seems a bad argument to advance—this was the original argument advanced by the Ministry—that it is far too difficult to make any change in the criteria laid down in the 1939 Act. We know that month after month during the past two years there have been regulations made by the Ministry which change various responsibilities of the Ministry and which change criteria.
I cannot believe that the effect of changing the regulations would be that the Minister would be besieged by persons claiming reckonable service. Three of four of my hon. Friends and two or three Opposition Members have approached me. They have indicated that there might be one or two of their constituents who would be affected by a change in the regulations such as I suggest would be proper. By meeting the point which I am making, the Minister would not be opening the floodgates for hundreds and thousands of people.
Not every day do we come across a man who taught in a school in Ceylon for six years and who arrived back in Great Britain on 3rd September 1939. As I say, he was put in a disadvantageous position compared with a man who had just entered training college on 2nd September. It is not every day that we come across such a case. All that the Minister has to do is to give effect by regulations to that which he acknowledged in his letter of 14th September to be the thinking behind the 1939 Act—namely, that, if a man can show that there was a pre-war intention to teach in a pensionable service, his war service should be pensionable.
Clearly my constituent can prove that that was his intention. He had never done another job in his adult life. He left Ceylon in August 1939, not to come back to this country to join up. He did not know any more than I did when he left Ceylon that war would break out. Clearly he left Ceylon to return to this

country to continue to follow the only career which he knew—namely, teaching.
It is clear that my constituent meets the criterion laid down by the Minister in his letter of 14th September. He was a man who before the war expressed an intention to teach in pensionable service, and by the Minister's own standards his war service should be pensionable. That service can be made pensionable by the Minister, not by coming to the House and asking for the 1939 Act to be amended but by laying the appropriate regulation to put right the obvious injustice.
I do not ask my hon. Friend to give me an immediate reply. I ask him to recognise the common sense and the obvious justice of what I have said. I ask him to recognise the obvious injustice of depriving a man of the pension rights which are afforded to others who, no more and no less than Mr. McKie, expressed by their conduct in 1939 their intention to return to teaching after they had served their country during the course of a war. Please let us get things right as soon as possible.

1.5 a.m.

Sir Gilbert Longden: I merely wish to add that I see no reason on earth why my hon. Friend the Under-Secretary should not be able to say something encouraging tonight. This type of case has been argued almost ever since I first came to the House. It is about time that the Secretary of State reached a decision about it. It is a just case and it should be honoured.

1.6 a.m.

The Under-Secretary of State for Education and Science (Mr. Norman St. John-Stevas): I should first like to congratulate my hon. and learned Friend the Member for Nelson and Colne (Mr. Waddington) on raising this issue. He is known as a most zealous constituency Member. He is one of the Members of this House who is always deeply concerned about any possible injustice to his constituents, and he has been deeply concerned about the question of Mr. McKie.
As my hon. and learned Friend said, we have been in correspondence about this case. I must say that I have some personal sympathy for Mr. McKie. He has been a borderline case. The facts of


his distinguished career as a teacher and his volunteering to serve in the Armed Forces have been graphically outlined by my hon. and learned Friend. Whatever sympathy I may feel, I cannot go against the law.
It is true that Mr. McKie first entered pensionable teaching service in the United Kingdom in October 1945. He had been a teacher before this in Ceylon. The operative phrase is "pensionable teaching service". Immediately before his entry into pensionable teaching service in October 1945 he had been for almost six years, since November 1939, in the Royal Air Force. This sequence of stages in his early carreer is decisive in the matter of excluding his RAF service during the war from pensionable reckoning. It means that he did not satisfy the single fundamental condition of the Teachers' Superannuation (War Service) Act 1939.
That condition was that a teacher's war service could be covered by the teachers superannuation scheme only if it interrupted his pensionable teaching service under that scheme. Mr. McKie was not at the time under the scheme. He may have been under some scheme in Ceylon; I do not know. In any case this is irrelevant for the purposes of that Act.

Mr. Waddington: Is not my hon. Friend ignoring one rather important point which I raised? What on earth has the Act got to do with it? It was repealed years ago. What is all this business about the procedure being that there must be an interruption of pensionable service when the Act which has been repealed had written into it something very different from "interruption of pensionable service"; namely, a provision that a person would be entitled to his war service being reckonable if he had been accepted for teacher training college? That man's war service did not interrupt his pensionable service.

Mr. St. John-Stevas: I appreciate the zeal with which my hon. and learned Friend champions the right of his constituent, but had I been allowed to continue uninterrupted I was about to come to that point.
My hon. and learned Friend is a little unfair to imply in regard to the letter

things that were not meant to be implied. We knew the Act was repealed, but the Act continues to apply to those affected by its provisions when it came into operation. It is necessary to appreciate in its historical context the strictly limited purpose of the Teachers' Superannuation Act. The Act was passed on 5th September 1939 to safeguard the pensionable position at that time of teachers who were in or who would be called into the Armed Forces as a result of the outbreak of hostilities two days previously.
My hon. and learned Friend sketched rather dramatically the alternative that might have been open to his constituent if he had obtained a position as a teacher. It is true that had he done so we should not now be having this debate. But this is a rather hypothetical situation, because could he have obtained a post in that situation when there was no shortage of teachers at that time and he himself was imminently likely to be called up?
The Act accordingly provided for war service to be pensionable in the case of a person who, in order to undertake war service, had ceased to be employed in pensionable teaching service. The same principle was embodied in corresponding arrangements made during the same period to deal with the pensionable position of other public employees, such as civil servants and local government officials, whose careers were interrupted by war service. There was never any intention that service in the Armed Forces should be made pensionable in the case of every person who had been employed in pensionable service of this kind or might become so employed at any other time.
It has been suggested that, in the light of his training and teaching employment overseas before joining the RAF in November 1939, the denial of pensionable reckoning for Mr. McKie's service rests on an over-strict interpretation of the Act. I am afraid, however, that that view does not accord with the facts. Some teachers enjoyed in this connection a concession which was not available to other public servants.
This brings me to the second point raised by my hon. and learned Friend. Because of the need for intending teachers to undergo courses of two or more years of professional training, the 1939 Act provided for the war service of students


already embarked on recognised teacher training courses to be pensionable from the time when, but for the war, they would ordinarily have begun pensionable teaching employment, thereby acknowledging their formal commitment to enter teaching. But that exception does not invalidate the basic principle, which remains that of the interruption of a pensionable career which had already begun. It is merely an extension of that same principle. Trainee teachers to whom this concession was made did not escape the operation of the principle, nor did the concession violate it.
The facts of Mr. McKie's case clearly do not in any way fit the requirement that, to be pensionable, war service must have constituted an interruption. Before he joined the RAF in November 1939 Mr. McKie had taught exclusively in Ceylon, where he acquired the qualifications upon which, when he later began teaching in this country, he was accorded the status of a qualified teacher.
It would not be possible therefore to argue, in relation to his entry into the RAF in November 1939, that he was postponing completion of a training course which in the ordinary course of events would automatically have been followed by employment pensionable under the teachers' superannuation scheme. Of course, as a teacher from overseas he did not, by joining up, interrupt employment which was so pensionable.
This is not to deny to Mr. McKie the sympathy which he feels to be his due. I have already expressed the view that to a certain extent I accept that, because it is a borderline and hard case; but there are many thousands of teachers whose war service before entry into the superannuation scheme is not pensionable and many others who, even though they may have been in pensionable teaching employment at some previous time, are unable to reckon their war service as pensionable because they were not so employed immediately before joining up.

Mr. Waddington: My hon. Friend said that it was rather artificial to talk about the possibility of Mr. McKie obtaining a teaching post when he got back to this country in September 1939. Does he or does he not agree that, if on 4th September 1939 Mr. McKie had been accepted for entry to a course for a teaching

diploma in this country, he would have had the whole of his war service reckon-able? If he accepts that as true, what is the justice of the case being put forward by the Department and what is all this talk about the Act when, acknowledging the justice of my constituent's case, the law can be altered not by amendment of an Act of Parliament but merely by the Minister laying a regulation tomorrow?

Mr. St. John-Stevas: I acknowledge the force of my hon. and learned Friend's remark, but the facts are that Mr. McKie did not take the action which he has described. He did not enter a course of teacher training or inscribe himself for it. Therefore, he does not come under the provisions of the Act which applies to those who did at that period.
Common to all the groups is the fact that they were not within the strictly limited groups of teachers whom it was the Government's intention to benefit by legislating in September 1939. There cannot have been a man, woman or child living at that time whose life would not, to a greater or lesser extent, be affected by the upheaval of war. Indeed, other considerations entirely apart, it would clearly have been beyond the capacity of any Government to provide by legislation that everyone should be put for all purposes in the position he would have occupied if there had been no war. The purposes and effects of the Teachers' Superannuation (War Service) Act 1939 were the limited and purely practical ones of establishing the rights of a defined group of existing employees.
My hon. and learned Friend dealt with a particular case in his constituency and was supported by my hon. Friend the Member for Hertfordshire, South-West (Sir Gilbert Longden), who placed it in the wider context of the whole general issue, which affects a great many people, of whether war service should be reckonable for teacher's pension purposes and, if so, under what conditions.
I am sure that both my hon. Friends will be aware that my right hon. Friend the Secretary of State has given an undertaking to the National Association of Schoolmasters to consider whether the war service of post-war entrants into pensionable teaching service, which is really the category which encompasses Mr. McKie, might count as to one-half for


pension. I cannot say more tonight than that she is considering this matter. Consideration is still proceeding with care and thoroughness. I cannot at this stage hope to indicate the outcome, but were this to be favourable the position of Mr. McKie would certainly be alleviated.
I should also point out that it is or will be open to Mr. McKie next year, if he wishes, to buy in at full cost past years of war service and so raise his pen

sion. Although I cannot give the kind of assurance for which my hon. and learned Friend asked this evening, the door is not entirely closed. My right hon. Friend is considering the matter and, whether her decisions be for or against, my hon. and learned Friend will be among, the first to be informed.

Question put and agreed to.

Adjourned accordingly at twenty minutes past One o'clock.